Shareholders in TrueBlue, Inc. (NYSE:TBI) had a terrible week, as shares crashed 24% to US$16.83 in the week since its latest yearly results. Revenues of US$2.4b were in line with forecasts, although statutory earnings per share (EPS) came in below expectations at US$1.61, missing estimates by 3.1%. Analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. 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 five analysts covering TrueBlue provided consensus estimates of US$2.30b revenue in 2020, which would reflect a noticeable 2.9% decline on its sales over the past 12 months. Statutory earnings per share are expected to nosedive 20% to US$1.29 in the same period. Before this earnings report, analysts had been forecasting revenues of US$2.31b and earnings per share (EPS) of US$1.56 in 2020. Analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a real cut to EPS estimates.
It might be a surprise to learn that the consensus price target was broadly unchanged at US$20.25, with analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values TrueBlue at US$22.00 per share, while the most bearish prices it at US$17.00. Still, with such a tight range of estimates, it suggests analysts have a pretty good idea of what they think the company is worth.
In addition, we can look to TrueBlue's past performance and see whether business is expected to improve, and if the company is expected to perform better than wider market. One obvious concern is that although revenues are forecast to continue shrinking, the expected 2.9% decline next year is substantially more severe than the 0.7% annual decline over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the market are forecast to see their revenue decline 6.8% per year. So it looks like TrueBlue is also expected to see its revenues decline at a faster rate than the wider market.
The Bottom Line
The most important thing to take away is that analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the plus side, there were no major changes to revenue estimates; although analyst forecasts imply revenues will perform worse 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.
With that in mind, we wouldn't be too quick to come to a conclusion on TrueBlue. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple TrueBlue analysts - going out to 2021, and you can see them free on our platform here.
Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Simply Wall St has no position in the stocks mentioned.
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