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Shareholders might have noticed that Elevate Credit, Inc. (NYSE:ELVT) filed its quarterly result this time last week. The early response was not positive, with shares down 7.0% to US$2.52 in the past week. Revenues of US$94m fell slightly short of expectations, but earnings were a definite bright spot, with statutory per-share profits of US$0.52 an impressive 252% ahead of estimates. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Elevate Credit after the latest results.
Following the recent earnings report, the consensus from four analysts covering Elevate Credit is for revenues of US$486.7m in 2021, implying a sizeable 25% decline in sales compared to the last 12 months. Statutory earnings per share are forecast to plummet 75% to US$0.30 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$512.9m and earnings per share (EPS) of US$0.30 in 2021. The consensus seems maybe a little more pessimistic, trimming their revenue forecasts after the latest results even though there was no change to its EPS estimates.
The analysts have also increased their price target 5.9% to US$3.00, clearly signalling that lower revenue forecasts next year are not expected to have a material impact on Elevate Credit's valuation. 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. Currently, the most bullish analyst values Elevate Credit at US$3.50 per share, while the most bearish prices it at US$2.50. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that sales are expected to slow, with a forecast revenue decline of 25%, a significant reduction from annual growth of 9.6% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 8.3% annually for the foreseeable future. It's pretty clear that Elevate Credit's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider industry. Even so, long term profitability is more important for the value creation process. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
With that in mind, we wouldn't be too quick to come to a conclusion on Elevate Credit. Long-term earnings power is much more important than next year's profits. We have forecasts for Elevate Credit going out to 2022, and you can see them free on our platform here.
You should always think about risks though. Case in point, we've spotted 2 warning signs for Elevate Credit you should be aware of, and 1 of them is a bit concerning.
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. 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.
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