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PowerFleet, Inc. (NASDAQ:PWFL) Released Earnings Last Week And Analysts Lifted Their Price Target To US$9.80

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Simply Wall St
·4 min read
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PowerFleet, Inc. (NASDAQ:PWFL) just released its latest third-quarter results and things are looking bullish. Results overall were solid, with revenues arriving 4.6% better than analyst forecasts at US$28m. Higher revenues also resulted in substantially lower statutory losses which, at US$0.06 per share, were 4.6% smaller than the analysts expected. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

Check out our latest analysis for PowerFleet

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

Following the latest results, PowerFleet's five analysts are now forecasting revenues of US$130.3m in 2021. This would be a notable 9.2% improvement in sales compared to the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 99% to US$0.0075. Before this earnings announcement, the analysts had been modelling revenues of US$136.2m and losses of US$0.033 per share in 2021. Although the revenue estimates have fallen somewhat, PowerFleet'sfuture looks a little different to the past, with a the loss per share forecasts in particular.

There was a decent 11% increase in the price target to US$9.80, with the analysts clearly signalling that the expected reduction in losses is a positive, despite a weaker revenue outlook. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic PowerFleet analyst has a price target of US$12.00 per share, while the most pessimistic values it at US$8.50. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that PowerFleet's revenue growth is expected to slow, with forecast 9.2% increase next year well below the historical 23%p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 7.7% next year. Factoring in the forecast slowdown in growth, it looks like PowerFleet is forecast to grow at about the same rate as the wider industry.

The Bottom Line

The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. They also downgraded their revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider industry. Still, earnings are more important to the intrinsic value of the business. 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 in mind, we wouldn't be too quick to come to a conclusion on PowerFleet. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple PowerFleet analysts - going out to 2022, and you can see them free on our platform here.

You still need to take note of risks, for example - PowerFleet has 2 warning signs we think 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@simplywallst.com.