It's been a sad week for Unisys Corporation (NYSE:UIS), who've watched their investment drop 13% to US$14.84 in the week since the company reported its yearly result. Revenues of US$2.9b arrived in line with expectations, although statutory losses per share were US$0.31, an impressive 69% smaller than what broker models predicted. 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. We've gathered the most recent statutory forecasts to see whether analysts have changed their earnings models, following these results.
Following the recent earnings report, the consensus fromthree analysts covering Unisys expects revenues of US$2.57b in 2020, implying a not inconsiderable 13% decline in sales compared to the last 12 months. Per-share statutory losses are expected to explode, reaching US$0.08 per share. Yet prior to the latest earnings, analysts had been forecasting revenues of US$2.84b and losses of US$0.23 per share in 2020. While revenue forecasts have been revised downwards, analysts look to have become more optimistic on the company's earnings power, given the very substantial lift in to earnings per share forecasts.
The consensus price target rose 33% to US$21.67, with analysts increasingly optimistic about shrinking losses, despite the expected decline in sales. 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 Unisys, with the most bullish analyst valuing it at US$30.00 and the most bearish at US$17.00 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.
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 obvious concern is that although revenues are forecast to continue shrinking, the expected 13% decline next year is substantially more severe than the 2.8% 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 11% per year. It seems clear that while revenues are expected to continue declining, analysts also expect the downturn to be more severe than that of the wider market.
The Bottom Line
The most important thing to take away is that analysts increased their loss per share estimates for 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 per share 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.
With that in mind, we wouldn't be too quick to come to a conclusion on Unisys. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Unisys going out to 2022, and you can see them free on our platform here..
We also provide an overview of the Unisys Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.
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