Performance Food Group Company Just Beat EPS By 117%: Here's What Analysts Think Will Happen Next
It's been a pretty great week for Performance Food Group Company (NYSE:PFGC) shareholders, with its shares surging 10% to US$52.98 in the week since its latest second-quarter results. Revenues were US$6.8b, approximately in line with whatthe analysts expected, although statutory earnings per share (EPS) crushed expectations, coming in at US$0.13, an impressive 117% ahead of estimates. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. 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 Performance Food Group
Taking into account the latest results, the consensus forecast from Performance Food Group's eight analysts is for revenues of US$28.3b in 2021, which would reflect a modest 6.0% improvement in sales compared to the last 12 months. Earnings are expected to improve, with Performance Food Group forecast to report a statutory profit of US$0.34 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$28.4b and earnings per share (EPS) of US$0.27 in 2021. Although the revenue estimates have not really changed, we can see there's been a massive increase in earnings per share expectations, suggesting that the analysts have become more bullish after the latest result.
The consensus price target rose 6.0% to US$56.35, suggesting that higher earnings estimates flow through to the stock's valuation as well. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Performance Food Group at US$62.00 per share, while the most bearish prices it at US$32.50. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Performance Food Group's revenue growth is expected to slow, with forecast 6.0% increase next year well below the historical 11%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 3.8% next year. Even after the forecast slowdown in growth, it seems obvious that Performance Food Group is also expected to grow faster than the wider industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Performance Food Group's earnings potential next year. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
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 Performance Food Group going out to 2025, and you can see them free on our platform here..
Even so, be aware that Performance Food Group is showing 4 warning signs in our investment analysis , and 1 of those makes us a bit uncomfortable...
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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