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Limoneira Company (NASDAQ:LMNR) just released its quarterly report and things are looking bullish. Limoneira delivered a significant beat to revenue and earnings per share (EPS) expectations, with sales hitting US$54m, some 15% above indicated. Statutory EPS were US$0.12, an impressive 757% ahead of forecasts. 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.
Following the latest results, Limoneira's five analysts are now forecasting revenues of US$208.3m in 2021. This would be a huge 22% improvement in sales compared to the last 12 months. Limoneira is also expected to turn profitable, with statutory earnings of US$0.26 per share. In the lead-up to this report, the analysts had been modelling revenues of US$208.2m and earnings per share (EPS) of US$0.29 in 2021. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.
Despite cutting their earnings forecasts,the analysts have lifted their price target 5.7% to US$18.40, suggesting that these impacts are not expected to weigh on the stock's value in the long term. 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. Currently, the most bullish analyst values Limoneira at US$20.00 per share, while the most bearish prices it at US$17.00. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.
Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that Limoneira's rate of growth is expected to accelerate meaningfully, with the forecast 22% revenue growth noticeably faster than its historical growth of 12%p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 2.7% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Limoneira is expected to grow much faster than its 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. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. 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.
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 forecasts for Limoneira going out to 2022, and you can see them free on our platform here.
And what about risks? Every company has them, and we've spotted 2 warning signs for Limoneira (of which 1 shouldn't be ignored!) you should know about.
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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