Growth Investors: Industry Analysts Just Upgraded Their GUD Holdings Limited (ASX:GUD) Revenue Forecasts By 15%

GUD Holdings Limited (ASX:GUD) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. The revenue forecast for this year has experienced a facelift, with the analysts now much more optimistic on its sales pipeline.

After this upgrade, GUD Holdings' ten analysts are now forecasting revenues of AU$735m in 2022. This would be a substantial 32% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to shoot up 26% to AU$0.81. Previously, the analysts had been modelling revenues of AU$638m and earnings per share (EPS) of AU$0.80 in 2022. It seems analyst sentiment has certainly become more bullish on revenues, even though they haven't changed their view on earnings per share.

See our latest analysis for GUD Holdings

Even though revenue forecasts increased, there was no change to the consensus price target of AU$13.93, suggesting the analysts are focused on earnings as the driver of value creation. 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 GUD Holdings at AU$15.75 per share, while the most bearish prices it at AU$12.00. Still, with such a tight range of estimates, it suggests the analysts have a pretty good idea of what they think the company is worth.

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. The analysts are definitely expecting GUD Holdings' growth to accelerate, with the forecast 32% annualised growth to the end of 2022 ranking favourably alongside historical growth of 8.2% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 14% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that GUD Holdings is expected to grow much faster than its industry.

The Bottom Line

The most obvious conclusion from this consensus update is that there's been no major change in the business' prospects in recent times, with analysts holding earnings per share steady, in line with previous estimates. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. Seeing the dramatic upgrade to this year's forecasts, it might be time to take another look at GUD Holdings.

Using these estimates as a starting point, we've run a discounted cash flow calculation (DCF) on GUD Holdings that suggests the company could be somewhat undervalued. You can learn more about our valuation methodology on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.