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As you might know, One Stop Systems, Inc. (NASDAQ:OSS) recently reported its quarterly numbers. It was a workmanlike result, with revenues of US$13m coming in 5.5% ahead of expectations, and statutory earnings per share of US$0.05, in line with analyst appraisals. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Taking into account the latest results, the most recent consensus for One Stop Systems from three analysts is for revenues of US$59.2m in 2021 which, if met, would be a reasonable 5.0% increase on its sales over the past 12 months. Per-share earnings are expected to jump 75% to US$0.09. In the lead-up to this report, the analysts had been modelling revenues of US$63.8m and earnings per share (EPS) of US$0.097 in 2021. It's pretty clear that pessimism has reared its head after the latest results, leading to a weaker revenue outlook and a minor downgrade to earnings per share estimates.
Despite the cuts to forecast earnings, there was no real change to the US$4.33 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic One Stop Systems analyst has a price target of US$5.50 per share, while the most pessimistic values it at US$3.50. 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 One Stop Systems shareholders.
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. We would highlight that One Stop Systems' revenue growth is expected to slow, with forecast 5.0% increase next year well below the historical 30%p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 7.6% per year. Factoring in the forecast slowdown in growth, it seems obvious that One Stop Systems is also expected to grow slower than other industry participants.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for One Stop Systems. Unfortunately, they also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
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. At Simply Wall St, we have a full range of analyst estimates for One Stop Systems going out to 2021, and you can see them free on our platform here..
Even so, be aware that One Stop Systems is showing 4 warning signs in our investment analysis , 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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