Results: Covenant Logistics Group, Inc. Exceeded Expectations And The Consensus Has Updated Its Estimates

As you might know, Covenant Logistics Group, Inc. (NASDAQ:CVLG) just kicked off its latest quarterly results with some very strong numbers. It was a solid earnings report, with revenues and statutory earnings per share (EPS) both coming in strong. Revenues were 12% higher than the analyst had forecast, at US$317m, while EPS were US$1.56 beating analyst models by 26%. Following the result, the analyst has 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 collected the latest post-earnings statutory consensus estimate to see what could be in store for next year.

Check out our latest analysis for Covenant Logistics Group

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Following last week's earnings report, Covenant Logistics Group's sole analyst are forecasting 2022 revenues to be US$1.16b, approximately in line with the last 12 months. Statutory earnings per share are expected to decrease 7.8% to US$4.78 in the same period. In the lead-up to this report, the analyst had been modelling revenues of US$1.13b and earnings per share (EPS) of US$4.48 in 2022. It looks like there's been a modest increase in sentiment following the latest results, withthe analyst becoming a bit more optimistic in their predictions for both revenues and earnings.

With these upgrades, we're not surprised to see that the analyst has lifted their price target 29% to US$30.63per share.

Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 3.4% by the end of 2022. This indicates a significant reduction from annual growth of 8.2% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 6.1% annually for the foreseeable future. It's pretty clear that Covenant Logistics Group's revenues are expected to perform substantially worse 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 Covenant Logistics Group's earnings potential next year. Fortunately, they also upgraded their revenue estimates, although our data indicates sales are expected to perform worse than the wider industry. We note an upgrade to the price target, suggesting that the analyst believes the intrinsic value of the business is likely to improve over time.

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 analyst estimates for Covenant Logistics Group going out as far as 2023, and you can see them free on our platform here.

We don't want to rain on the parade too much, but we did also find 1 warning sign for Covenant Logistics Group that you need to be mindful of.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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