Canfor Corporation (TSE:CFP) Just Reported First-Quarter Earnings: Have Analysts Changed Their Mind On The Stock?

It's been a good week for Canfor Corporation (TSE:CFP) shareholders, because the company has just released its latest first-quarter results, and the shares gained 3.9% to CA$21.15. The results don't look great, especially considering that statutory losses grew 118% toCA$1.17 per share. Revenues of CA$1.4b did beat expectations by 7.2%, but it looks like a bit of a cold comfort. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

See our latest analysis for Canfor

After the latest results, the consensus from Canfor's six analysts is for revenues of CA$5.60b in 2023, which would reflect a definite 15% decline in sales compared to the last year of performance. Earnings are expected to tip over into lossmaking territory, with the analysts forecasting statutory losses of -CA$0.39 per share in 2023. Yet prior to the latest earnings, the analysts had been forecasting revenues of CA$5.48b and losses of CA$0.30 per share in 2023. So it's pretty clear the analysts have mixed opinions on Canfor even after this update; although they upped their revenue numbers, it came at the cost of a sizeable expansion in per-share losses.

There was no major change to the consensus price target of CA$27.90, with growing revenues seemingly enough to offset the concern of growing losses. 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. The most optimistic Canfor analyst has a price target of CA$33.00 per share, while the most pessimistic values it at CA$22.16. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

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. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 20% by the end of 2023. This indicates a significant reduction from annual growth of 12% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 3.8% annually for the foreseeable future. It's pretty clear that Canfor's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts increased their loss per share estimates for next year. They also upgraded their revenue estimates for next year, even though sales are expected to grow slower 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.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Canfor going out to 2025, and you can see them free on our platform here.

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 2 warning signs with Canfor , and understanding them should be part of your investment process.

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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.