There's been a major selloff in AirBoss of America Corp. (TSE:BOS) shares in the week since it released its yearly report, with the stock down 32% to CA$5.73. It was a credible result overall, with revenues of US$328m and statutory earnings per share of US$0.44 both in line with analyst estimates, showing that AirBoss of America is executing in line with expectations. Earnings are an important time for investors, as they can track a company's performance, look at what top analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We thought readers would find it interesting to see analysts' latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the current consensus from AirBoss of America's five analysts is for revenues of US$357.9m in 2020, which would reflect a meaningful 9.1% increase on its sales over the past 12 months. Statutory earnings per share are expected to bounce 43% to US$0.63. Before this earnings report, analysts had been forecasting revenues of US$348.4m and earnings per share (EPS) of US$0.63 in 2020. So it looks like there's been no major change in sentiment following the latest results, although analysts have made a small lift in to revenue forecasts.
Even though revenue forecasts increased, the consensus price target 6.3% to US$8.53, perhaps suggesting that analysts have become more pessimistic about the lack of earnings growth. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic AirBoss of America analyst has a price target of US$9.28 per share, while the most pessimistic values it at US$8.01. Still, with such a tight range of estimates, it suggests analysts have a pretty good idea of what they think the company is worth.
Zooming out to look at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up both against past performance, and against industry growth estimates. Analysts are definitely expecting AirBoss of America's growth to accelerate, with the forecast 9.1% growth ranking favourably alongside historical growth of 1.5% per annum over the past five years. Compare this with other companies in the same market, which are forecast to grow their revenue 4.0% next year. It seems obvious that, while the growth outlook is brighter than the recent past, analysts also expect AirBoss of America to grow faster than the wider market.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. Pleasantly, analysts also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider market. Analysts also downgraded their price target, suggesting that the latest news has led analysts to become more pessimistic about the intrinsic value of the business.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for AirBoss of America going out to 2022, and you can see them free on our platform here..
You can also view our analysis of AirBoss of America's balance sheet, and whether we think AirBoss of America is carrying too much debt, for free on our platform here.
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