Stingray Group Inc. Just Missed Earnings And Its EPS Looked Sad - But Analysts Have Updated Their Models
It's been a pretty great week for Stingray Group Inc. (TSE:RAY.A) shareholders, with its shares surging 11% to CA$4.63 in the week since its latest full-year results. It looks like a pretty bad result, all things considered. Although revenues of CA$307m were in line with analyst predictions, statutory earnings fell badly short, missing estimates by 54% to hit CA$0.18 per share. Following the result, the 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
See our latest analysis for Stingray Group
Taking into account the latest results, Stingray Group's eight analysts currently expect revenues in 2021 to be CA$301.6m, approximately in line with the last 12 months. Statutory earnings per share are predicted to soar 182% to CA$0.52. In the lead-up to this report, the analysts had been modelling revenues of CA$307.5m and earnings per share (EPS) of CA$0.55 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 CA$7.19, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. 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 Stingray Group at CA$8.50 per share, while the most bearish prices it at CA$6.00. 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.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. These estimates imply that sales are expected to slow, with a forecast revenue decline of 1.7%, a significant reduction from annual growth of 31% 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 2.0% annually for the foreseeable future. It's pretty clear that Stingray Group's revenues are expected to perform substantially worse 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. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Stingray Group's revenues are expected to perform worse than the wider industry. The consensus price target held steady at CA$7.19, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn't be too quick to come to a conclusion on Stingray Group. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Stingray Group going out to 2023, and you can see them free on our platform here..
It is also worth noting that we have found 5 warning signs for Stingray Group (2 are concerning!) that you need to take into consideration.
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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. Thank you for reading.
