SILK Laser Australia Limited (ASX:SLA) just released its annual report and things are looking bullish. The company beat both earnings and revenue forecasts, with revenue of AU$81m, some 5.6% above estimates, and statutory earnings per share (EPS) coming in at AU$0.12, 28% ahead of expectations. 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 gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Taking into account the latest results, the most recent consensus for SILK Laser Australia from three analysts is for revenues of AU$91.1m in 2023 which, if met, would be a meaningful 12% increase on its sales over the past 12 months. Per-share earnings are expected to leap 28% to AU$0.15. In the lead-up to this report, the analysts had been modelling revenues of AU$85.1m and earnings per share (EPS) of AU$0.19 in 2023. While next year's revenue estimates increased, there was also a pretty serious reduction to EPS expectations, suggesting the consensus has a bit of a mixed view of these results.
Curiously, the consensus price target rose 10% to AU$3.56. We can only conclude that the forecast revenue growth is expected to offset the impact of the expected fall in earnings. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values SILK Laser Australia at AU$3.80 per share, while the most bearish prices it at AU$3.27. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong 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 SILK Laser Australia's past performance and to peers in the same industry. It's pretty clear that there is an expectation that SILK Laser Australia's revenue growth will slow down substantially, with revenues to the end of 2023 expected to display 12% growth on an annualised basis. This is compared to a historical growth rate of 38% over the past three years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 2.2% per year. Even after the forecast slowdown in growth, it seems obvious that SILK Laser Australia is also expected to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple SILK Laser Australia analysts - going out to 2025, 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 2 warning signs for SILK Laser Australia that you need to be mindful of.
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SILK Laser Australia
SILK Laser Australia Limited operates and franchises a network of clinics that offer non-surgical aesthetic services in Australia and New Zealand.
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Very undervalued with high growth potential.