It's been a good week for John Wiley & Sons, Inc. (NYSE:JW.A) shareholders, because the company has just released its latest quarterly results, and the shares gained 2.7% to US$48.52. It looks like a credible result overall - although revenues of US$466m were what analysts expected, John Wiley & Sons surprised by delivering a profit of US$0.79 per share, an impressive 30% above what analysts had forecast. This is an important time for investors, as they can track a company's performance in its report, look at what top analysts are forecasting for next year, and see if there has been any change to expectations for the business. So we gathered the latest post-earnings forecasts to see what analysts are forecasting for next year.
Following last week's earnings report, John Wiley & Sons's four analysts are forecasting 2020 revenues to be US$1.86b, approximately in line with the last 12 months. Earnings per share are expected to fall 14% to US$2.22 in the same period. Yet prior to the latest earnings, analysts had been forecasting revenues of US$1.87b and earnings per share (EPS) of US$2.16 in 2020. Analysts seem to have become more bullish on the business, judging by their new earnings per share estimates.
There's been no major changes to the consensus price target of US$51.63, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. 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. The most optimistic John Wiley & Sons analyst has a price target of US$56.00 per share, while the most pessimistic values it at US$49.50. Still, with such a tight range of estimates, it suggests analysts have a pretty good idea of what they think the company is worth.
In addition, we can look to John Wiley & Sons's past performance and see whether business is expected to improve, and if the company is expected to perform better than wider market. Analysts are definitely expecting John Wiley & Sons's growth to accelerate, with the forecast 1.7% growth ranking favourably alongside historical growth of 0.2% per annum 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 3.8% per year. So it's clear that despite the acceleration in growth, John Wiley & Sons is expected to grow meaningfully slower than the market average.
The Bottom Line
The biggest takeaway for us from these new estimates is that the consensus upgraded its earnings per share estimates, showing a clear improvement in sentiment around John Wiley & Sons's earnings potential next year. On the plus side, there were no major changes to revenue estimates; although analyst forecasts imply revenues will perform worse 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 estimates - from multiple John Wiley & Sons analysts - going out to 2022, and you can see them free on our platform here.
You can also see whether John Wiley & Sons is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
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