EVERTEC, Inc. Just Missed Earnings - But Analysts Have Updated Their Models
There's been a notable change in appetite for EVERTEC, Inc. (NYSE:EVTC) shares in the week since its yearly report, with the stock down 11% to US$36.85. It looks like a pretty bad result, all things considered. Although revenues of US$695m were in line with analyst predictions, statutory earnings fell badly short, missing estimates by 21% to hit US$1.21 per share. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
See our latest analysis for EVERTEC
Taking into account the latest results, the consensus forecast from EVERTEC's six analysts is for revenues of US$849.8m in 2024. This reflects a major 22% improvement in revenue compared to the last 12 months. Per-share earnings are expected to bounce 31% to US$1.59. In the lead-up to this report, the analysts had been modelling revenues of US$796.9m and earnings per share (EPS) of US$2.19 in 2024. So it's pretty clear the analysts have mixed opinions on EVERTEC after the latest results; even though they upped their revenue numbers, it came at the cost of a pretty serious reduction to per-share earnings expectations.
There's been no major changes to the price target of US$42.00, suggesting that the impact of higher forecast revenue and lower earnings won't result in a meaningful change to the business' valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic EVERTEC analyst has a price target of US$47.00 per share, while the most pessimistic values it at US$33.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await EVERTEC shareholders.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's clear from the latest estimates that EVERTEC's rate of growth is expected to accelerate meaningfully, with the forecast 22% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 8.4% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 4.0% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect EVERTEC to grow faster than the wider industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for EVERTEC. Happily, they also upgraded their revenue estimates, and are forecasting them to grow faster than the wider industry. The consensus price target held steady at US$42.00, with the latest estimates not enough to have an impact on their price targets.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for EVERTEC going out to 2026, and you can see them free on our platform here.
However, before you get too enthused, we've discovered 2 warning signs for EVERTEC that you should be aware of.
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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.
