There's been a major selloff in E Automotive Inc. (TSE:EINC) shares in the week since it released its quarterly report, with the stock down 22% to CA$9.42. The results don't look great, especially considering that statutory losses grew 102% toUS$0.31 per share. Revenues of US$25m did beat expectations by 9.8%, but it looks like a bit of a cold comfort. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
After the latest results, the seven analysts covering E Automotive are now predicting revenues of US$116.1m in 2022. If met, this would reflect a huge 31% improvement in sales compared to the last 12 months. Losses are forecast to balloon 27% to US$0.95 per share. Before this earnings announcement, the analysts had been modelling revenues of US$107.2m and losses of US$0.60 per share in 2022. So it's pretty clear the analysts have mixed opinions on E Automotive even after this update; although they upped their revenue numbers, it came at the cost of a very substantial increase in per-share losses.
Spiting the revenue upgrading, the average price target fell 17% to CA$20.52, clearly signalling that higher forecast losses are a valuation concern. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values E Automotive at CA$27.81 per share, while the most bearish prices it at CA$16.90. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the E Automotive's past performance and to peers in the same industry. We would highlight that E Automotive's revenue growth is expected to slow, with the forecast 44% annualised growth rate until the end of 2022 being well below the historical 116% growth over the last year. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 11% annually. So it's pretty clear that, while E Automotive's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.
The Bottom Line
The most important thing to take away is that the analysts increased their loss per share estimates for next year. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of E Automotive's future valuation.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for E Automotive going out to 2024, and you can see them free on our platform here..
You still need to take note of risks, for example - E Automotive has 3 warning signs we think you should be aware of.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.