NIC Inc. (NASDAQ:EGOV) shareholders are probably feeling a little disappointed, since its shares fell 7.2% to US$23.83 in the week after its latest quarterly results. Revenues of US$91m were in line with forecasts, although statutory earnings per share (EPS) came in below expectations at US$0.18, missing estimates by 2.7%. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Taking into account the latest results, the current consensus from NIC's four analysts is for revenues of US$380.2m in 2020, which would reflect a reasonable 5.6% increase on its sales over the past 12 months. Statutory per-share earnings are expected to be US$0.76, roughly flat on the last 12 months. Before this earnings report, the analysts had been forecasting revenues of US$385.6m and earnings per share (EPS) of US$0.79 in 2020. The analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share numbers for next year.
It might be a surprise to learn that the consensus price target was broadly unchanged at US$26.00, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. 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 NIC at US$28.00 per share, while the most bearish prices it at US$24.00. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.
Of course, another way to look at these forecasts is to place them into context against the industry itself. Next year brings more of the same, according to the analysts, with revenue forecast to grow 5.6%, in line with its 4.9% annual growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 11% per year. So although NIC is expected to maintain its revenue growth rate, it's forecast to grow slower than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. The consensus price target held steady at US$26.00, with the latest estimates not enough to have an impact on their price targets.
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 estimates - from multiple NIC analysts - going out to 2021, and you can see them free on our platform here.
You still need to take note of risks, for example - NIC has 1 warning sign we think you should be aware of.
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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