Earnings Update: Shift4 Payments, Inc. (NYSE:FOUR) Just Reported Its First-Quarter Results And Analysts Are Updating Their Forecasts
It's been a mediocre week for Shift4 Payments, Inc. (NYSE:FOUR) shareholders, with the stock dropping 16% to US$44.09 in the week since its latest first-quarter results. Revenues of US$402m beat expectations by a respectable 4.8%, although statutory losses per share increased. Shift4 Payments lost US$0.13, which was 20% more than what the analysts had included in their models. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
View our latest analysis for Shift4 Payments
Taking into account the latest results, the most recent consensus for Shift4 Payments from twelve analysts is for revenues of US$1.98b in 2022 which, if met, would be a substantial 29% increase on its sales over the past 12 months. Earnings are expected to improve, with Shift4 Payments forecast to report a statutory profit of US$0.23 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$1.96b and earnings per share (EPS) of US$0.45 in 2022. So there's definitely been a decline in sentiment after the latest results, noting the pretty serious reduction to new EPS forecasts.
The consensus price target held steady at US$70.64, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Shift4 Payments, with the most bullish analyst valuing it at US$97.00 and the most bearish at US$38.00 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Shift4 Payments' past performance and to peers in the same industry. We would highlight that Shift4 Payments' revenue growth is expected to slow, with the forecast 41% annualised growth rate until the end of 2022 being well below the historical 90% growth over the last year. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 13% per year. So it's pretty clear that, while Shift4 Payments' revenue growth is expected to slow, it's still expected to grow faster than the industry itself.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Shift4 Payments. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. The consensus price target held steady at US$70.64, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn't be too quick to come to a conclusion on Shift4 Payments. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Shift4 Payments analysts - going out to 2024, and you can see them free on our platform here.
It is also worth noting that we have found 2 warning signs for Shift4 Payments that you need to take into consideration.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
