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EVERTEC, Inc. (NYSE:EVTC) shareholders are probably feeling a little disappointed, since its shares fell 3.4% to US$36.03 in the week after its latest full-year results. EVERTEC reported US$511m in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$1.43 beat expectations, being 3.4% higher than what the analysts expected. 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 gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
After the latest results, the eight analysts covering EVERTEC are now predicting revenues of US$540.4m in 2021. If met, this would reflect a satisfactory 5.8% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to ascend 12% to US$1.63. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$534.7m and earnings per share (EPS) of US$1.78 in 2021. The analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share numbers for next year.
The consensus price target held steady at US$38.00, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. 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$46.00 per share, while the most pessimistic values it at US$20.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
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. We can infer from the latest estimates that forecasts expect a continuation of EVERTEC'shistorical trends, as the 5.8% annualised revenue growth to the end of 2021 is roughly in line with the 6.7% annual revenue growth over the past five years. Compare this with the broader industry (in aggregate), which analyst estimates suggest will see revenues grow 14% annually. So although EVERTEC is expected to maintain its revenue growth rate, it's forecast to grow slower 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. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that EVERTEC's revenues are expected to perform worse than the wider industry. The consensus price target held steady at US$38.00, with the latest estimates not enough to have an impact on their price targets.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for EVERTEC going out to 2023, 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 EVERTEC you should be aware of.
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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