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Kforce Inc. (NASDAQ:KFRC) just released its first-quarter report and things are looking bullish. The company beat expectations with revenues of US$335m arriving 4.6% ahead of forecasts. Statutory earnings per share (EPS) were US$0.42, 8.3% ahead of estimates. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Taking into account the latest results, the current consensus, from the six analysts covering Kforce, is for revenues of US$1.28b in 2020, which would reflect a discernible 5.8% reduction in Kforce's sales over the past 12 months. Statutory earnings per share are expected to tumble 28% to US$1.78 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$1.26b and earnings per share (EPS) of US$1.77 in 2020. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
The consensus price target rose 6.6% to US$32.25 despite there being no meaningful change to earnings estimates. It could be that the analystsare reflecting the predictability of Kforce's earnings by assigning a price premium. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Kforce at US$35.00 per share, while the most bearish prices it at US$30.00. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that sales are expected to reverse, with the forecast 5.8% revenue decline a notable change from historical growth of 1.6% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 5.8% annually for the foreseeable future. It's pretty clear that Kforce's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Kforce's revenues are expected to perform worse than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Kforce going out to 2021, and you can see them free on our platform here.
And what about risks? Every company has them, and we've spotted 3 warning signs for Kforce you should know about.
If you spot an error that warrants correction, please contact the editor at email@example.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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