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There's been a notable change in appetite for Kinsale Capital Group, Inc. (NASDAQ:KNSL) shares in the week since its quarterly report, with the stock down 11% to US$187. Statutory earnings per share of US$0.65 unfortunately missed expectations by 19%, although it was encouraging to see revenues of US$123m exceed expectations by 7.3%. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Kinsale Capital Group after the latest results.
After the latest results, the six analysts covering Kinsale Capital Group are now predicting revenues of US$558.8m in 2021. If met, this would reflect a huge 35% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to leap 23% to US$3.78. In the lead-up to this report, the analysts had been modelling revenues of US$538.1m and earnings per share (EPS) of US$3.73 in 2021. There doesn't appear to have been a major change in sentiment following the results, other than the slight bump in revenue estimates.
The consensus price target increased 5.5% to US$216, with an improved revenue forecast carrying the promise of a more valuable business, in time. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Kinsale Capital Group analyst has a price target of US$220 per share, while the most pessimistic values it at US$202. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Kinsale Capital Group's past performance and to peers in the same industry. It's clear from the latest estimates that Kinsale Capital Group's rate of growth is expected to accelerate meaningfully, with the forecast 35% revenue growth noticeably faster than its historical growth of 28%p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 4.8% next year. Factoring in the forecast acceleration in revenue, it's pretty clear that Kinsale Capital Group is expected to grow much faster than its industry.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Happily, they also upgraded their revenue estimates, and are forecasting revenues to grow faster 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.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Kinsale Capital Group going out to 2022, and you can see them free on our platform here.
It is also worth noting that we have found 1 warning sign for Kinsale Capital Group that you need to take into consideration.
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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