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As you might know, SciPlay Corporation (NASDAQ:SCPL) just kicked off its latest quarterly results with some very strong numbers. It was a decent earnings report, with revenues and statutory earnings per share (EPS) both performing well. Revenues were 20% higher than the analysts had forecast, at US$166m, while EPS of US$0.27 beat analyst models by 10%. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Taking into account the latest results, the consensus forecast from SciPlay's eleven analysts is for revenues of US$560.3m in 2020, which would reflect a decent 9.2% improvement in sales compared to the last 12 months. Statutory earnings per share are forecast to dive 42% to US$0.97 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$521.2m and earnings per share (EPS) of US$0.90 in 2020. It looks like there's been a modest increase in sentiment following the latest results, withthe analysts becoming a bit more optimistic in their predictions for both revenues and earnings.
It will come as no surprise to learn that the analysts have increased their price target for SciPlay 22% to US$17.62on the back of these upgrades. 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. The most optimistic SciPlay analyst has a price target of US$22.50 per share, while the most pessimistic values it at US$12.30. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's pretty clear that there is an expectation that SciPlay's revenue growth will slow down substantially, with revenues next year expected to grow 9.2%, compared to a historical growth rate of 13% over the past year. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 14% next year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than SciPlay.
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 SciPlay following these results. 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 analysts believes the intrinsic value of the business is likely to improve over time.
With that in mind, we wouldn't be too quick to come to a conclusion on SciPlay. Long-term earnings power is much more important than next year's profits. We have forecasts for SciPlay going out to 2023, and you can see them free on our platform here.
Don't forget that there may still be risks. For instance, we've identified 1 warning sign for SciPlay that 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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