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Shareholders in Black Diamond Group Limited (TSE:BDI) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. The analysts have sharply increased their revenue numbers, with a view that Black Diamond Group will make substantially more sales than they'd previously expected.
Following the upgrade, the most recent consensus for Black Diamond Group from its five analysts is for revenues of CA$260m in 2021 which, if met, would be a substantial 30% increase on its sales over the past 12 months. The losses are expected to disappear over the next year or so, with forecasts for a profit of CA$0.13 per share this year. Previously, the analysts had been modelling revenues of CA$243m and earnings per share (EPS) of CA$0.11 in 2021. So it seems there's been a definite increase in optimism about Black Diamond Group's future following the latest consensus numbers, with a great increase in the earnings per share forecasts in particular.
With these upgrades, we're not surprised to see that the analysts have lifted their price target 13% to CA$5.30 per share. 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 Black Diamond Group analyst has a price target of CA$5.00 per share, while the most pessimistic values it at CA$4.50. This is a very narrow spread of estimates, implying either that Black Diamond Group is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
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 Black Diamond Group's rate of growth is expected to accelerate meaningfully, with the forecast 41% annualised revenue growth to the end of 2021 noticeably faster than its historical growth of 1.3% 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 12% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Black Diamond Group is expected to grow much faster than its industry.
The Bottom Line
The most important thing to take away from this upgrade is that analysts upgraded their earnings per share estimates for this year, expecting improving business conditions. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. There was also an increase in the price target, suggesting that there is more optimism baked into the forecasts than there was previously. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at Black Diamond Group.
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 Black Diamond Group going out to 2022, and you can see them free on our platform here..
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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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