ChannelAdvisor Corporation (NYSE:ECOM) investors will be delighted, with the company turning in some strong numbers with its latest results. It was overall a positive result, with revenues beating expectations by 2.5% to hit US$35m. ChannelAdvisor reported statutory earnings per share (EPS) US$0.12, which was a notable 20% above what the analysts had forecast. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on ChannelAdvisor after the latest results.
After the latest results, the five analysts covering ChannelAdvisor are now predicting revenues of US$149.8m in 2021. If met, this would reflect a satisfactory 7.4% improvement in sales compared to the last 12 months. Per-share earnings are expected to accumulate 6.5% to US$0.68. In the lead-up to this report, the analysts had been modelling revenues of US$148.1m and earnings per share (EPS) of US$0.71 in 2021. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a small dip in their earnings per share forecasts.
The consensus price target held steady at US$21.38, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on ChannelAdvisor, with the most bullish analyst valuing it at US$24.50 and the most bearish at US$18.00 per share. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the ChannelAdvisor's past performance and to peers in the same industry. We can infer from the latest estimates that forecasts expect a continuation of ChannelAdvisor'shistorical trends, as next year's 7.4% revenue growth is roughly in line with 6.3% annual revenue growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 13% per year. So although ChannelAdvisor is expected to maintain its revenue growth rate, it's forecast to grow slower than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. 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.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for ChannelAdvisor going out to 2024, and you can see them free on our platform here.
You still need to take note of risks, for example - ChannelAdvisor 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.
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