Plus Products Inc. (CSE:PLUS) Just Reported Earnings, And Analysts Cut Their Target Price

Simply Wall St
November 25, 2020

As you might know, Plus Products Inc. (CSE:PLUS) recently reported its quarterly numbers. Sales were dismal, with revenues of US$3.7m coming in some 22% below forecasts. The only bright spot was that statutory losses of US$0.05 per share were 17% smaller than the analysts had predicted. 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 Plus Products after the latest results.

Check out our latest analysis for Plus Products

CNSX:PLUS Earnings and Revenue Growth November 25th 2020

Taking into account the latest results, the most recent consensus for Plus Products from two analysts is for revenues of US$36.8m in 2021 which, if met, would be a huge 127% increase on its sales over the past 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 88% to US$0.09. Before this earnings announcement, the analysts had been modelling revenues of US$36.8m and losses of US$0.09 per share in 2021.

As a result, it's unexpected to see that the consensus price target fell 7.4% to US$1.05, with the analysts seemingly becoming more concerned about ongoing losses, despite making no major changes to their forecasts.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. The analysts are definitely expecting Plus Products' growth to accelerate, with the forecast 127% growth ranking favourably alongside historical growth of 62% per annum over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 33% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Plus Products is expected to grow much faster than its industry.

The Bottom Line

The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. 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. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Plus Products' 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 least one analyst has provided forecasts out to 2021, which can be seen for free on our platform here.

Before you take the next step you should know about the 3 warning signs for Plus Products that we have uncovered.

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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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