The annual results for VirTra, Inc. (NASDAQ:VTSI) were released last week, making it a good time to revisit its performance. The results don't look great, especially considering that the analyst had been forecasting a profit and VirTra delivered a statutory loss ofUS$0.01 per share. Revenues of US$19m did beat expectations by 2.5% though. Following the result, the analyst has 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. So we gathered the latest post-earnings forecasts to see what estimate suggests is in store for next year.
Taking into account the latest results, the current consensus from VirTra's sole analyst is for revenues of US$19.6m in 2020, which would reflect a modest 4.9% increase on its sales over the past 12 months. VirTra is also expected to turn profitable, with statutory earnings of US$0.01 per share. In the lead-up to this report, the analyst had been modelling revenues of US$19.7m and earnings per share (EPS) of US$0.07 in 2020. The analyst seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a large cut to EPS estimates.
The average price target fell 20% to US$4.00, with reduced earnings forecasts clearly tied to a lower valuation estimate.
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. We would highlight that VirTra's revenue growth is expected to slow, with forecast 4.9% increase next year well below the historical 7.2%p.a. growth over the last five years. Compare this to the 82 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 5.2% per year. Factoring in the forecast slowdown in growth, it looks like VirTra is forecast to grow at about the same rate as the wider industry.
The Bottom Line
The biggest concern is that the analyst reduced their earnings per share estimates, suggesting business headwinds could lay ahead for VirTra. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. Furthermore, the analyst also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At least one analyst has provided forecasts out to 2021, which can be seen for free on our platform here.
Even so, be aware that VirTra is showing 2 warning signs in our investment analysis , you should know about...
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