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Telephone and Data Systems, Inc. (NYSE:TDS) just released its quarterly report and things are looking bullish. The company beat both earnings and revenue forecasts, with revenue of US$1.3b, some 2.3% above estimates, and statutory earnings per share (EPS) coming in at US$0.66, 216% ahead of expectations. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Taking into account the latest results, the current consensus from Telephone and Data Systems' three analysts is for revenues of US$5.36b in 2021, which would reflect a credible 3.4% increase on its sales over the past 12 months. Statutory earnings per share are expected to dive 56% to US$0.86 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$5.34b and earnings per share (EPS) of US$0.76 in 2021. Although the revenue estimates have not really changed, we can see there's been a nice increase in earnings per share expectations, suggesting that the analysts have become more bullish after the latest result.
The consensus price target was unchanged at US$31.90, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Telephone and Data Systems, with the most bullish analyst valuing it at US$42.50 and the most bearish at US$25.00 per share. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Telephone and Data Systems' past performance and to peers in the same industry. One thing stands out from these estimates, which is that Telephone and Data Systems is forecast to grow faster in the future than it has in the past, with revenues expected to grow 3.4%. If achieved, this would be a much better result than the 0.02% annual decline over the past five years. Compare this against analyst estimates for the wider industry, which suggest that (in aggregate) industry revenues are expected to grow 4.3% next year. Although Telephone and Data Systems' revenues are expected to improve, it seems that the analysts are still bearish on the business, forecasting it to grow slower than the wider industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Telephone and Data Systems' earnings potential next year. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. The consensus price target held steady at US$31.90, with the latest estimates not enough to have an impact on their price targets.
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 estimates - from multiple Telephone and Data Systems analysts - going out to 2023, and you can see them free on our platform here.
And what about risks? Every company has them, and we've spotted 4 warning signs for Telephone and Data Systems (of which 2 don't sit too well with us!) 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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