Investors in Boyd Group Services Inc. (TSE:BYD) had a good week, as its shares rose 8.3% to close at CA$216 following the release of its quarterly results. Revenues of CA$508m fell slightly short of expectations, but earnings were a definite bright spot, with statutory per-share profits of CA$0.98 an impressive 263% ahead of estimates. 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.
Following the latest results, Boyd Group Services' twelve analysts are now forecasting revenues of CA$2.63b in 2021. This would be a substantial 22% improvement in sales compared to the last 12 months. Per-share earnings are expected to shoot up 116% to CA$5.33. Before this earnings report, the analysts had been forecasting revenues of CA$2.72b and earnings per share (EPS) of CA$5.41 in 2021. So it looks like the analysts have become a bit less optimistic after the latest results announcement, with revenues expected to fall even as the company is supposed to maintain EPS.
The consensus has reconfirmed its price target of CA$242, showing that the analysts don't expect weaker sales expectations next year to have a material impact on Boyd Group Services' market value. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Boyd Group Services, with the most bullish analyst valuing it at CA$255 and the most bearish at CA$223 per share. This is a very narrow spread of estimates, implying either that Boyd Group Services is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. The analysts are definitely expecting Boyd Group Services' growth to accelerate, with the forecast 22% growth ranking favourably alongside historical growth of 15% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 13% next year. Factoring in the forecast acceleration in revenue, it's pretty clear that Boyd Group Services is expected to grow much faster than its industry.
The Bottom Line
The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. With that said, earnings are more important to the long-term value of the business. The consensus price target held steady at CA$242, with the latest estimates not enough to have an impact on their price targets.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Boyd Group Services going out to 2024, and you can see them free on our platform here.
You should always think about risks though. Case in point, we've spotted 3 warning signs for Boyd Group Services 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.
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