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Waterloo Brewing Ltd. Just Missed Earnings; Here's What Analysts Are Forecasting Now

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Simply Wall St
·4 min read
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It's been a good week for Waterloo Brewing Ltd. (TSE:WBR) shareholders, because the company has just released its latest quarterly results, and the shares gained 4.7% to CA$2.90. Revenues came in at CA$15m, in line with estimates, while Waterloo Brewing reported a statutory loss of CA$0.01 per share, well short of prior analyst forecasts for a profit. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

View our latest analysis for Waterloo Brewing

TSX:WBR Past and Future Earnings June 1st 2020
TSX:WBR Past and Future Earnings June 1st 2020

Taking into account the latest results, the most recent consensus for Waterloo Brewing from four analysts is for revenues of CA$72.1m in 2021 which, if met, would be a solid 15% increase on its sales over the past 12 months. Per-share earnings are expected to soar 1497% to CA$0.14. Before this earnings result, the analysts had predicted CA$72.7m revenue in 2021, although there was no accompanying EPS estimate. It looks like the analysts are starting to apply closer scrutiny to Waterloo Brewing following these results. While they haven't made any changes to their revenue estimates, they began providing an earnings forecast for next year.

The consensus price target was unchanged at CA$4.88, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. 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 Waterloo Brewing, with the most bullish analyst valuing it at CA$5.00 and the most bearish at CA$4.50 per share. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.

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. The analysts are definitely expecting Waterloo Brewing's growth to accelerate, with the forecast 15% growth ranking favourably alongside historical growth of 10% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 5.6% next year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Waterloo Brewing to grow faster than the wider industry.

The Bottom Line

The biggest takeaway for us from these new estimates is the bullish forecast for profits next year. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target held steady at CA$4.88, with the latest estimates not enough to have an impact on their price targets.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Waterloo Brewing analysts - going out to 2022, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 6 warning signs for Waterloo Brewing (1 doesn't sit too well with us!) that you should be aware of.

Love or hate this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.

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. Thank you for reading.