Last week, you might have seen that J & J Snack Foods Corp. (NASDAQ:JJSF) released its first-quarter result to the market. The early response was not positive, with shares down 8.7% to US$168 in the past week. Revenues were in line with forecasts, at US$283m, although statutory earnings per share came in 13% below what analysts expected, at US$0.89 per share. Following the result, 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 analysts' statutory forecasts suggest is in store for next year.
After the latest results, the two analysts covering J & J Snack Foods are now predicting revenues of US$1.23b in 2020. If met, this would reflect a satisfactory 2.4% improvement in sales compared to the last 12 months. Statutory per share are forecast to be US$5.05, approximately in line with the last 12 months. Before this earnings report, analysts had been forecasting revenues of US$1.22b and earnings per share (EPS) of US$5.31 in 2020. 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 forecasts for next year.
It might be a surprise to learn that the consensus price target was broadly unchanged at US$186, with analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation.
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 J & J Snack Foods's revenue growth is expected to slow, with forecast 2.4% increase next year well below the historical 5.3%p.a. growth over the last five years. By way of comparison, other companies in this market with analyst coverage, are forecast to grow their revenue at 2.9% per year. Factoring in the forecast slowdown in growth, it seems obvious that analysts still expect J & J Snack Foods to grow slower than the wider market.
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 J & J Snack Foods. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that J & J Snack Foods's revenues are expected to perform worse than the wider market. The consensus price target held steady at US$186, with the latest estimates not enough to have an impact on analysts' estimated valuations.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have analyst estimates for J & J Snack Foods going out as far as 2022, and you can see them free on our platform here.
Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.
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