Interfor Corporation (TSE:IFP) Just Released Its First-Quarter Results And Analysts Are Updating Their Estimates

Shareholders of Interfor Corporation (TSE:IFP) will be pleased this week, given that the stock price is up 13% to CA$36.92 following its latest first-quarter results. Results were roughly in line with estimates, with revenues of CA$849m and statutory earnings per share of CA$4.00. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Interfor after the latest results.

Check out our latest analysis for Interfor

Taking into account the latest results, the most recent consensus for Interfor from three analysts is for revenues of CA$2.88b in 2021 which, if met, would be a notable 13% increase on its sales over the past 12 months. Per-share earnings are expected to accumulate 5.1% to CA$8.56. Yet prior to the latest earnings, the analysts had been anticipated revenues of CA$2.88b and earnings per share (EPS) of CA$6.75 in 2021. Although the revenue estimates have not really changed, we can see there's been a considerable lift to earnings per share expectations, suggesting that the analysts have become more bullish after the latest result.

There's been no major changes to the consensus price target of CA$41.75, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. 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. There are some variant perceptions on Interfor, with the most bullish analyst valuing it at CA$50.00 and the most bearish at CA$27.23 per share. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's clear from the latest estimates that Interfor's rate of growth is expected to accelerate meaningfully, with the forecast 18% annualised revenue growth to the end of 2021 noticeably faster than its historical growth of 3.9% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 2.6% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Interfor is expected to grow much faster than its industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Interfor's earnings potential next year. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target held steady at CA$41.75, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on Interfor. Long-term earnings power is much more important than next year's profits. We have forecasts for Interfor going out to 2024, and you can see them free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 3 warning signs for Interfor (1 can't be ignored) you should be aware of.

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This article by Simply Wall St is general in nature. 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.
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