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Leslie's, Inc. (NASDAQ:LESL) just released its second-quarter report and things are looking bullish. The results were impressive, with revenues of US$192m exceeding analyst forecasts by 21%, and statutory losses of US$0.03 were likewise much smaller than the analysts had forecast. The 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Following last week's earnings report, Leslie's' eleven analysts are forecasting 2021 revenues to be US$1.20b, approximately in line with the last 12 months. Per-share earnings are expected to shoot up 22% to US$0.51. Before this earnings report, the analysts had been forecasting revenues of US$1.20b and earnings per share (EPS) of US$0.51 in 2021. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
The consensus price target rose 8.5% to US$33.18despite there being no meaningful change to earnings estimates. It could be that the analystsare reflecting the predictability of Leslie's' earnings by assigning a price premium. 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. There are some variant perceptions on Leslie's, with the most bullish analyst valuing it at US$40.00 and the most bearish at US$22.00 per share. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Leslie's shareholders.
Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 0.02% by the end of 2021. This indicates a significant reduction from annual growth of 20% over the last year. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 11% per year. It's pretty clear that Leslie'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 Leslie'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.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Leslie's going out to 2025, 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 Leslie's (of which 2 are potentially serious!) you should know about.
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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