It's been a sad week for Score Media and Gaming Inc. (CVE:SCR), who've watched their investment drop 11% to CA$0.71 in the week since the company reported its quarterly result. It looks like a moderately negative result overall with revenues falling 15% short of analyst estimates at CA$9.2m. Statutory losses were CA$0.01 per share, roughly in line with what analysts expected. Following the result, analysts have 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. With this in mind, we've gathered the latest statutory forecasts to see what analysts are expecting for next year.
Taking into account the latest results, the most recent consensus for Score Media and Gaming from three analysts is for revenues of CA$37.1m in 2020, which is a huge 20% increase on its sales over the past 12 months. The statutory loss per share is expected to greatly reduce in the near future, narrowing 75% to CA$0.07. Yet prior to the latest earnings, analysts had been forecasting revenues of CA$42.3m and losses of CA$0.035 per share in 2020. Indeed, we can see that analysts are a lot more bearish about Score Media and Gaming's prospects following the latest results, administering a real cut to revenue estimates and slashing their EPS estimates to boot.
The average analyst price target lifted 6.7% to CA$1.07, clearly signalling that the weaker revenue and EPS outlook are not expected to weigh on the stock over the longer 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. The most optimistic Score Media and Gaming analyst has a price target of CA$1.10 per share, while the most pessimistic values it at CA$1.00. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that analysts have a clear view on its prospects.
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. We can infer from the latest estimates that analysts are expecting a continuation of Score Media and Gaming's historical trends, as next year's forecast 20% revenue growth is roughly in line with 19% annual revenue growth over the past five years. Compare this with the wider market, which analyst estimates (in aggregate) suggest will see revenues grow 7.0% next year. So it's pretty clear that Score Media and Gaming is forecast to grow substantially faster than its market.
The Bottom Line
The most important thing to take away is that analysts reduced their loss per share estimates for next year, perhaps highlighting increased optimism around Score Media and Gaming's prospects. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider market. Analysts also upgraded their price target, suggesting that analysts believe the intrinsic value of the business is likely to improve over time.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for Score Media and Gaming going out to 2022, and you can see them free on our platform here..
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