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It's been a good week for Globant S.A. (NYSE:GLOB) shareholders, because the company has just released its latest annual results, and the shares gained 2.5% to US$230. The result was positive overall - although revenues of US$814m were in line with what the analysts predicted, Globant surprised by delivering a statutory profit of US$1.37 per share, modestly greater than expected. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Taking into account the latest results, the consensus forecast from Globant's ten analysts is for revenues of US$1.06b in 2021, which would reflect a substantial 31% improvement in sales compared to the last 12 months. Per-share earnings are expected to leap 65% to US$2.32. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$1.02b and earnings per share (EPS) of US$2.06 in 2021. There's been a pretty noticeable increase in sentiment, with the analysts upgrading revenues and making a nice increase in earnings per share in particular.
It will come as no surprise to learn that the analysts have increased their price target for Globant 6.6% to US$218on the back of these upgrades. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Globant at US$240 per share, while the most bearish prices it at US$124. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Globant's past performance and to peers in the same industry. It's clear from the latest estimates that Globant's rate of growth is expected to accelerate meaningfully, with the forecast 31% revenue growth noticeably faster than its historical growth of 23%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 15% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Globant is expected to grow much faster than its industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Globant following these results. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. 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 Globant. Long-term earnings power is much more important than next year's profits. We have forecasts for Globant going out to 2023, and you can see them free on our platform here.
We don't want to rain on the parade too much, but we did also find 1 warning sign for Globant that you need to be mindful 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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