Flexible Solutions International Inc. (NYSEMKT:FSI) shareholders are probably feeling a little disappointed, since its shares fell 9.4% to US$1.15 in the week after its latest annual results. Revenues were US$27m, approximately in line with whatthe analyst expected, although statutory earnings per share (EPS) crushed expectations, coming in at US$0.16, an impressive 45% ahead of estimates. This is an important time for investors, as they can track a company’s performance in its report, look at what expert is forecasting for next year, and see if there has been any change to expectations for the business. With this in mind, we’ve gathered the latest statutory forecasts to see what the analyst is expecting for next year.
Following last week’s earnings report, Flexible Solutions International’s lone analyst are forecasting 2020 revenues to be US$27.2m, approximately in line with the last 12 months. Statutory earnings per share are predicted to swell 12% to US$0.18. In the lead-up to this report, the analyst had been modelling revenues of US$30.0m and earnings per share (EPS) of US$0.20 in 2020. The analyst seem less optimistic after the recent results, reducing their sales forecasts and making a substantial drop in earnings per share numbers.
The consensus price target fell 23% to US$2.50, with the weaker earnings outlook clearly leading valuation estimates.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Flexible Solutions International’s past performance and to peers in the same industry. These estimates imply that sales are expected to slow, with a forecast revenue decline of 1.0%, a significant reduction from annual growth of 9.3% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 3.1% next year. It’s pretty clear that Flexible Solutions International’s revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most important thing to take away is that the analyst downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider industry. The consensus price target fell measurably, with the analyst seemingly not reassured by the latest results, leading to a lower estimate of Flexible Solutions International’s future valuation.
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. We have analyst estimates for Flexible Solutions International going out as far as 2021, and you can see them free on our platform here.
We don’t want to rain on the parade too much, but we did also find 5 warning signs for Flexible Solutions International that you need to be mindful of.
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