One of the biggest stories of last week was how Nesco Holdings, Inc. (NYSE:NSCO) shares plunged 23% in the week since its latest third-quarter results, closing yesterday at US$3.65. It looks like a pretty bad result, given that revenues fell 11% short of analyst estimates at US$62m, and the company reported a loss of US$0.45 per share instead of the profit that analysts had been forecasting. This is an important time for investors, as they can track a company's performance in its report, look at what top analysts are forecasting for next year, and see if there has been any change to expectations for the business. We've gathered the most recent forecasts to see whether analysts have changed their earnings models, following these results.
Taking into account the latest results, the latest consensus from Nesco Holdings's only analyst is for revenues of US$297.6m in 2020, which would reflect a solid 17% improvement in sales compared to the last 12 months. Nesco Holdings is also expected to turn profitable, with earnings of US$0.57 per share. In the lead-up to this report, analysts had been modelling revenues of US$329.0m and earnings per share (EPS) of US$293 in 2020. Analysts seem less optimistic after the recent results, reducing their sales forecasts and making a large cut to earnings per share forecasts.
It'll come as no surprise then, to learn that analysts have cut their price target 15% to US$7.25.
It can also be useful to step back and take a broader view of how analyst forecasts compare to Nesco Holdings's performance in recent years. Analysts are definitely expecting Nesco Holdings's growth to accelerate, with the forecast 17% growth ranking favourably alongside historical growth of 12% per annum over the past three years. Compare this with other companies in the same market, which are forecast to grow their revenue 4.5% next year. It seems obvious that, while the growth outlook is brighter than the recent past, analysts also expect Nesco Holdings to grow faster than the wider market.
The Bottom Line
The biggest highlight of the new consensus is that analysts have reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Nesco Holdings. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider market. Analysts also downgraded their price target, suggesting that the latest news has led analysts to become more pessimistic about the intrinsic value of the business.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At least one analyst has provided forecasts out to 2022, which can be seen for free on our platform here.
You can also view our analysis of Nesco Holdings's balance sheet, and whether we think Nesco Holdings is carrying too much debt, for free on our platform here.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.