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US$8.75: That's What Analysts Think EuroDry Ltd. (NASDAQ:EDRY) Is Worth After Its Latest Results

Simply Wall St
·3 min read

EuroDry Ltd. (NASDAQ:EDRY) just released its latest second-quarter report and things are not looking great. Unfortunately, EuroDry delivered a serious earnings miss. Revenues of US$4.0m were 15% below expectations, and statutory losses ballooned 62% to US$1.86 per share. The 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

View our latest analysis for EuroDry

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earnings-and-revenue-growth

Taking into account the latest results, the twin analysts covering EuroDry provided consensus estimates of US$21.7m revenue in 2020, which would reflect a measurable 7.8% decline on its sales over the past 12 months. Losses are forecast to balloon 37% to US$3.44 per share. Before this earnings announcement, the analysts had been modelling revenues of US$22.5m and losses of US$3.06 per share in 2020. So it's pretty clear the analysts have mixed opinions on EuroDry after this update; revenues were downgraded and per-share losses expected to increase.

The consensus price target fell 7.6% to US$8.75, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook.

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. These estimates imply that sales are expected to slow, with a forecast revenue decline of 7.8%, a significant reduction from annual growth of 8.6% over the last three years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 2.7% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - EuroDry is expected to lag 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 EuroDry. Unfortunately, they also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At least one analyst has provided forecasts out to 2021, which can be seen for free on our platform here.

Plus, you should also learn about the 3 warning signs we've spotted with EuroDry (including 1 which doesn't sit too well with us) .

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.