Village Farms International, Inc. (TSE:VFF) Analysts Just Slashed This Year's Estimates
The analysts covering Village Farms International, Inc. (TSE:VFF) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Both revenue and earnings per share (EPS) estimates were cut sharply as the analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.
After the downgrade, the six analysts covering Village Farms International are now predicting revenues of US$249m in 2021. If met, this would reflect a huge 46% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to fall to a breakeven level. Before this latest update, the analysts had been forecasting revenues of US$282m and earnings per share (EPS) of US$0.29 in 2021. It looks like analyst sentiment has declined substantially, with a measurable cut to revenue estimates and a earnings per share numbers as well.
Check out our latest analysis for Village Farms International
We'd point out that there was no major changes to their price target of CA$25.80, suggesting the latest estimates were not enough to shift their view on the value of the business. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Village Farms International at CA$35.00 per share, while the most bearish prices it at CA$17.50. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's clear from the latest estimates that Village Farms International's rate of growth is expected to accelerate meaningfully, with the forecast 46% annualised revenue growth to the end of 2021 noticeably faster than its historical growth of 0.6% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 7.1% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Village Farms International is expected to grow much faster than its industry.
The Bottom Line
The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. The lack of change in the price target is puzzling in light of the downgrade but, with a serious decline expected this year, we wouldn't be surprised if investors were a bit wary of Village Farms International.
So things certainly aren't looking great, and you should also know that we've spotted some potential warning signs with Village Farms International, including major dilution from new stock issuance in the past year. Learn more, and discover the 3 other warning signs we've identified, for free on our platform here.
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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.
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