Propel Holdings Inc. Just Missed Earnings - But Analysts Have Updated Their Models

As you might know, Propel Holdings Inc. (TSE:PRL) recently reported its annual numbers. It looks like a pretty bad result, all things considered. Although revenues of US$130m were in line with analyst predictions, statutory earnings fell badly short, missing estimates by 39% to hit US$0.23 per share. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

See our latest analysis for Propel Holdings

Following the latest results, Propel Holdings' three analysts are now forecasting revenues of US$234.3m in 2022. This would be a major 81% improvement in sales compared to the last 12 months. Per-share earnings are expected to shoot up 182% to US$0.54. Before this earnings report, the analysts had been forecasting revenues of US$231.0m and earnings per share (EPS) of US$0.82 in 2022. The analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a pretty serious reduction to EPS estimates.

It might be a surprise to learn that the consensus price target fell 5.7% to CA$16.21, with the analysts clearly linking lower forecast earnings to the performance of the stock price. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Propel Holdings at CA$17.04 per share, while the most bearish prices it at CA$15.54. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. The analysts are definitely expecting Propel Holdings' growth to accelerate, with the forecast 81% annualised growth to the end of 2022 ranking favourably alongside historical growth of 23% per annum over the past three years. Compare this with other companies in the same industry, which are forecast to grow their revenue 32% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Propel Holdings is expected to grow much faster than its 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. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

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. We have forecasts for Propel Holdings going out to 2023, and you can see them free on our platform here.

Even so, be aware that Propel Holdings is showing 5 warning signs in our investment analysis , and 2 of those shouldn't be ignored...

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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.