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Unifi, Inc. Just Beat Earnings Expectations: Here's What Analysts Think Will Happen Next

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  • UFI

The investors in Unifi, Inc.'s (NYSE:UFI) will be rubbing their hands together with glee today, after the share price leapt 24% to US$15.74 in the week following its first-quarter results. It was a solid earnings report, with revenues and earnings both coming in very strong. Revenues were 12% higher than the analysts had forecast, at US$142m, while the company also delivered a surprise statutory profit, against analyst expectations of a loss. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

See our latest analysis for Unifi

earnings-and-revenue-growth
earnings-and-revenue-growth

Following last week's earnings report, Unifi's three analysts are forecasting 2021 revenues to be US$574.4m, approximately in line with the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 87% to US$0.40. Before this earnings announcement, the analysts had been modelling revenues of US$574.1m and losses of US$0.34 per share in 2021. So it's pretty clear the analysts have mixed opinions on Unifi even after this update; although they reconfirmed their revenue numbers, it came at the cost of a per-share losses.

Despite expectations of heavier losses next year,the analysts have lifted their price target 12% to US$19.00, perhaps implying these losses are not expected to be recurring over the long term. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Unifi analyst has a price target of US$18.00 per share, while the most pessimistic values it at US$16.00. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. The analysts are definitely expecting Unifi's growth to accelerate, with the forecast 1.1% growth ranking favourably alongside historical growth of 0.4% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 10% per year. It seems obvious that, while the future growth outlook is brighter than the recent past, Unifi is expected to grow slower than the wider industry.

The Bottom Line

The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Unifi. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

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 Unifi analysts - going out to 2025, and you can see them free on our platform here.

Before you take the next step you should know about the 1 warning sign for Unifi that we have uncovered.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.