There's been a notable change in appetite for Camping World Holdings, Inc. (NYSE:CWH) shares in the week since its full-year report, with the stock down 16% to US$13.68. Revenues of US$4.9b arrived in line with expectations, although statutory losses per share were US$1.62, an impressive 27% smaller than what broker models predicted. This is an important time for investors, as they can track a company's performance in its report, look at what top analysts are forecasting for next year, and see if there has been any change to expectations for the business. We've gathered the most recent statutory forecasts to see whether analysts have changed their earnings models, following these results.
After the latest results, the consensus from Camping World Holdings's six analysts is for revenues of US$4.74b in 2020, which would reflect a perceptible 3.2% decline in sales compared to the last year of performance. Camping World Holdings is also expected to turn profitable, with statutory earnings of US$0.87 per share. Yet prior to the latest earnings, analysts had been forecasting revenues of US$4.91b and earnings per share (EPS) of US$0.81 in 2020. If anything, analysts look to have become slightly more optimistic overall; while they decreased their revenue forecasts, EPS predictions increased and ultimately earnings are more important.
The average analyst price target rose 7.4% to US$13.18, with analysts signalling that the improved earnings outlook is the key driver of value for shareholders - enough to offset the reduction in revenue estimates. 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 Camping World Holdings at US$21.00 per share, while the most bearish prices it at US$6.00. With such a wide range in price targets, analysts are almost certainly baking in outcomes as diverse as total success and probable failure in the underlying business. As a result it might not be possible to derive much meaning from the consensus price target, which is after all just an average of this wide range of estimates.
It can also be useful to step back and take a broader view of how analyst forecasts compare to Camping World Holdings's performance in recent years. These estimates imply that sales are expected to slow, with a forecast revenue decline of 3.2% a significant reduction from annual growth of 12% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same market are forecast to see their revenue grow 5.6% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - analysts also expect Camping World Holdings to grow slower than the wider market.
The Bottom Line
The biggest takeaway for us from these new estimates is that the consensus upgraded its earnings per share estimates, showing a clear improvement in sentiment around Camping World Holdings's earnings potential next year. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider market. Even so, earnings are more important to the intrinsic value of the business. Analysts also upgraded their price target, suggesting that analysts believe the intrinsic value of the business is likely to improve over time.
Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Camping World Holdings analysts - going out to 2021, and you can see them free on our platform here.
You can also view our analysis of Camping World Holdings's balance sheet, and whether we think Camping World Holdings is carrying too much debt, for free on our platform here.
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