Industry Analysts Just Made A Sizeable Upgrade To Their Saunders International Limited (ASX:SND) Revenue Forecasts

Celebrations may be in order for Saunders International Limited (ASX:SND) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. The analysts have sharply increased their revenue numbers, with a view that Saunders International will make substantially more sales than they'd previously expected.

Following the upgrade, the latest consensus from Saunders International's twin analysts is for revenues of AU$110m in 2022, which would reflect a solid 8.6% improvement in sales compared to the last 12 months. Statutory earnings per share are anticipated to dive 32% to AU$0.036 in the same period. Before this latest update, the analysts had been forecasting revenues of AU$95m and earnings per share (EPS) of AU$0.033 in 2022. The forecasts seem more optimistic now, with a nice gain to revenue and a modest lift to earnings per share estimates.

Check out our latest analysis for Saunders International

It will come as no surprise to learn that the analysts have increased their price target for Saunders International 22% to AU$1.16 on the back of these upgrades. 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. The most optimistic Saunders International analyst has a price target of AU$1.22 per share, while the most pessimistic values it at AU$1.10. 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.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's pretty clear that there is an expectation that Saunders International's revenue growth will slow down substantially, with revenues to the end of 2022 expected to display 8.6% growth on an annualised basis. This is compared to a historical growth rate of 14% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 12% annually. Factoring in the forecast slowdown in growth, it seems obvious that Saunders International is also expected to grow slower than other industry participants.

The Bottom Line

The most important thing to take away from this upgrade is that analysts upgraded their earnings per share estimates for this year, expecting improving business conditions. Pleasantly, analysts also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow slower than the wider market. There was also an increase in the price target, suggesting that there is more optimism baked into the forecasts than there was previously. Seeing the dramatic upgrade to this year's forecasts, it might be time to take another look at Saunders International.

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

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

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.

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