Investors in Superior Plus Corp. (TSE:SPB) had a good week, as its shares rose 2.9% to close at CA$12.67 following the release of its third-quarter results. Revenues of CA$449m missed forecasts by 11%, but at least losses were much smaller than expected, with per-share losses of CA$0.34 coming in 32% smaller than what analysts had forecast. 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 forecasts to see what analysts are expecting for next year.
Taking into account the latest results, the most recent consensus for Superior Plus from six analysts is for revenues of CA$3.19b in 2020, which is a solid 9.8% increase on its sales over the past 12 months. Earnings per share are expected to jump 780% to CA$0.99. Before this earnings report, analysts had been forecasting revenues of CA$3.19b and earnings per share (EPS) of CA$0.99 in 2020. So it's pretty clear that, although analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
It will come as no surprise then, to learn that the consensus price target is largely unchanged at CA$14.94. 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. There are some variant perceptions on Superior Plus, with the most bullish analyst valuing it at CA$16.00 and the most bearish at CA$13.50 per share. Still, with such a tight range of estimates, it suggests analysts have a pretty good idea of what they think the company is worth.
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. One thing stands out from these estimates, which is that analysts are forecasting Superior Plus to grow faster in the future than it has in the past, with revenues expected to grow 9.8%. If achieved, this would be a much better result than the 4.6% annual decline over the past five years. Compare this against analyst estimates for the wider market, which suggest that (in aggregate) market revenues are expected to grow 4.0% next year. So it looks like Superior Plus is expected to grow faster than its competitors, at least for a while.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - and our data does suggest that Superior Plus's revenues are expected to grow faster than the wider market. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have forecasts for Superior Plus going out to 2021, and you can see them free on our platform here.
It might also be worth considering whether Superior Plus's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
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