Analyst Estimates: Here's What Brokers Think Of Straker Translations Limited (ASX:STG) After Its Interim Report

Simply Wall St
November 27, 2021
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Last week saw the newest half-year earnings release from Straker Translations Limited (ASX:STG), an important milestone in the company's journey to build a stronger business. The result was fairly weak overall, with revenues of NZ$23m being 3.6% less than what the analysts had been modelling. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

Check out our latest analysis for Straker Translations

ASX:STG Earnings and Revenue Growth November 27th 2021

Following the latest results, Straker Translations' dual analysts are now forecasting revenues of NZ$51.2m in 2022. This would be a sizeable 29% improvement in sales compared to the last 12 months. Losses are supposed to decline, shrinking 20% from last year to NZ$0.11. Yet prior to the latest earnings, the analysts had been forecasting revenues of NZ$52.6m and losses of NZ$0.044 per share in 2022. While this year's revenue estimates dropped there was also a very substantial increase in loss per share expectations, suggesting the consensus has a bit of a mixed view on the stock.

The average price target was broadly unchanged at AU$2.36, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation.

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. It's clear from the latest estimates that Straker Translations' rate of growth is expected to accelerate meaningfully, with the forecast 65% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 18% p.a. over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 5.2% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Straker Translations is expected to grow much faster than its industry.

The Bottom Line

The most important thing to take away is that the analysts increased their loss per share estimates for next year. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that in mind, we wouldn't be too quick to come to a conclusion on Straker Translations. Long-term earnings power is much more important than next year's profits. At least one analyst has provided forecasts out to 2024, which can be seen for free on our platform here.

It is also worth noting that we have found 3 warning signs for Straker Translations that you need to take into consideration.

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