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ModivCare Inc. Just Missed Earnings - But Analysts Have Updated Their Models

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Last week, you might have seen that ModivCare Inc. (NASDAQ:MODV) released its annual result to the market. The early response was not positive, with shares down 8.5% to US$134 in the past week. It looks like a pretty bad result, all things considered. Although revenues of US$1.4b were in line with analyst predictions, statutory earnings fell badly short, missing estimates by 52% to hit US$2.37 per share. 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 gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

Check out our latest analysis for ModivCare

earnings-and-revenue-growth
earnings-and-revenue-growth

Taking into account the latest results, the most recent consensus for ModivCare from four analysts is for revenues of US$2.04b in 2021 which, if met, would be a major 49% increase on its sales over the past 12 months. Statutory earnings per share are predicted to surge 110% to US$5.14. Before this earnings report, the analysts had been forecasting revenues of US$2.05b and earnings per share (EPS) of US$5.17 in 2021. 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 analysts reconfirmed their price target of US$183, showing that the business is executing well and in line with expectations. 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 ModivCare analyst has a price target of US$205 per share, while the most pessimistic values it at US$162. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. One thing stands out from these estimates, which is that ModivCare is forecast to grow faster in the future than it has in the past, with revenues expected to display 49% annualised growth until the end of 2021. If achieved, this would be a much better result than the 1.2% annual decline over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 7.1% annually. Not only are ModivCare's revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider 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, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target held steady at US$183, with the latest estimates not enough to have an impact on their price targets.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple ModivCare analysts - going out to 2023, and you can see them free on our platform here.

You should always think about risks though. Case in point, we've spotted 2 warning signs for ModivCare you should be aware of.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.