Intact Financial Corporation Just Recorded A 11% Earnings Beat: Here's What Analysts Think
Investors in Intact Financial Corporation (TSE:IFC) had a good week, as its shares rose 7.0% to close at CA$153 following the release of its annual results. It was a mildly positive result, with revenues exceeding expectations at CA$11b, while statutory earnings per share (EPS) of CA$5.08 were in line with analyst forecasts. 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 thought readers would find it interesting to see analysts' latest (statutory) post-earnings forecasts for next year.
View our latest analysis for Intact Financial
Taking into account the latest results, the latest consensus from Intact Financial's ten analysts is for revenues of CA$11.6b in 2020, which would reflect an okay 2.6% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to jump 42% to CA$7.21. Yet prior to the latest earnings, analysts had been forecasting revenues of CA$11.4b and earnings per share (EPS) of CA$7.76 in 2020. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but analysts did make a small dip in their earnings per share forecasts.
The consensus price target held steady at CA$155, with analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. 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 Intact Financial at CA$164 per share, while the most bearish prices it at CA$145. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that analysts have a clear view on its prospects.
Zooming out to look at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up both against past performance, and against industry growth estimates. We would highlight that Intact Financial's revenue growth is expected to slow, with forecast 2.6% increase next year well below the historical 8.0%p.a. growth over the last five years. Juxtapose this against the other companies in the market with analyst coverage, which are forecast to grow their revenues (in aggregate) 1.1% next year. So it's pretty clear that, while Intact Financial's revenue growth is expected to slow, it's still expected to grow faster than the market itself.
The Bottom Line
The biggest concern with the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Intact Financial. Happily, there were no major changes to revenue forecasts, with analysts still expecting the business to grow faster than the wider market. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Still, the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Intact Financial going out to 2021, and you can see them free on our platform here.
It might also be worth considering whether Intact Financial's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.
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