Analysts' Revenue Estimates For Fleetwood Limited (ASX:FWD) Are Surging Higher

Celebrations may be in order for Fleetwood Limited (ASX:FWD) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. The revenue forecast for this year has experienced a facelift, with analysts now much more optimistic on its sales pipeline.

Following the upgrade, the latest consensus from Fleetwood's two analysts is for revenues of AU$430m in 2022, which would reflect a notable 9.1% improvement in sales compared to the last 12 months. The losses are expected to disappear over the next year or so, with forecasts for a profit of AU$0.17 per share this year. Prior to this update, the analysts had been forecasting revenues of AU$366m and earnings per share (EPS) of AU$0.21 in 2022. Although revenues are expected to increase, the analysts have become more pessimistic on earnings, given the real cut to EPS estimates following the latest update.

View our latest analysis for Fleetwood

Analysts also cut Fleetwood's price target 11% to AU$2.87, implying that lower forecast earnings are expected to have a more negative impact than can be offset by the increase in sales. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Fleetwood, with the most bullish analyst valuing it at AU$3.00 and the most bearish at AU$2.74 per share. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that the analysts have a clear view on its prospects.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Fleetwood's past performance and to peers in the same industry. It's clear from the latest estimates that Fleetwood's rate of growth is expected to accelerate meaningfully, with the forecast 19% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 7.7% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 8.8% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Fleetwood is expected to grow much faster than its industry.

The Bottom Line

The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for Fleetwood. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. Furthermore, there was a cut to the price target, suggesting that the latest news has led to more pessimism about the intrinsic value of the business. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at Fleetwood.

These earnings upgrades look like a sterling endorsement, but before diving in - you should know that we've spotted 2 potential concern with Fleetwood, including the risk of cutting its dividend. You can learn more, and discover the 1 other concern we've identified, for free 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.