It's been a pretty great week for Dollarama Inc. (TSE:DOL) shareholders, with its shares surging 10% to CA$57.00 in the week since its latest full-year results. Dollarama reported in line with analyst predictions, delivering revenues of CA$4.0b and statutory earnings per share of CA$1.81, suggesting the business is executing well and in line with its plan. 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've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Taking into account the latest results, the consensus forecast from Dollarama's eleven analysts is for revenues of CA$4.46b in 2022, which would reflect a decent 11% improvement in sales compared to the last 12 months. Per-share earnings are expected to surge 26% to CA$2.29. Before this earnings report, the analysts had been forecasting revenues of CA$4.42b and earnings per share (EPS) of CA$2.28 in 2022. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
It will come as no surprise then, to learn that the consensus price target is largely unchanged at CA$60.64. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Dollarama, with the most bullish analyst valuing it at CA$68.00 and the most bearish at CA$55.00 per share. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.
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. The analysts are definitely expecting Dollarama's growth to accelerate, with the forecast 11% annualised growth to the end of 2022 ranking favourably alongside historical growth of 8.2% per annum 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 4.8% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Dollarama to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. 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. 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.
With that in mind, we wouldn't be too quick to come to a conclusion on Dollarama. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Dollarama going out to 2023, and you can see them free on our platform here..
You should always think about risks though. Case in point, we've spotted 1 warning sign for Dollarama 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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