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As you might know, BRP Inc. (TSE:DOO) just kicked off its latest third-quarter results with some very strong numbers. It was overall a positive result, with revenues beating expectations by 3.9% to hit CA$1.7b. BRP also reported a statutory profit of CA$2.22, which was an impressive 47% above what the analysts had forecast. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Taking into account the latest results, the current consensus from BRP's 13 analysts is for revenues of CA$6.63b in 2022, which would reflect a solid 15% increase on its sales over the past 12 months. Statutory earnings per share are predicted to soar 110% to CA$5.20. Before this earnings report, the analysts had been forecasting revenues of CA$6.36b and earnings per share (EPS) of CA$4.59 in 2022. There's been a pretty noticeable increase in sentiment, with the analysts upgrading revenues and making a nice increase in earnings per share in particular.
It will come as no surprise to learn that the analysts have increased their price target for BRP 8.8% to CA$84.75on the back of these upgrades. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on BRP, with the most bullish analyst valuing it at CA$107 and the most bearish at CA$52.00 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the BRP's past performance and to peers in the same industry. It's clear from the latest estimates that BRP's rate of growth is expected to accelerate meaningfully, with the forecast 15% revenue growth noticeably faster than its historical growth of 10%p.a. over the past five years. Other similar companies in the industry (with analyst coverage) are also forecast to grow their revenue at 14% per year. BRP is expected to grow at about the same rate as its industry, so it's not clear that we can draw any conclusions from its growth relative to competitors.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards BRP following these results. There was also an upgrade to revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
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 BRP analysts - going out to 2025, and you can see them free on our platform here.
You still need to take note of risks, for example - BRP has 4 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.
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