Banxa Holdings Inc. (CVE:BNXA) Just Released Its First-Quarter Earnings: Here's What Analysts Think

Banxa Holdings Inc. (CVE:BNXA) shareholders are probably feeling a little disappointed, since its shares fell 2.0% to CA$3.40 in the week after its latest quarterly results. It was a weak result overall, with Banxa Holdings reporting AU$12m in revenues, which was 20% less than what the analysts had expected. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

See our latest analysis for Banxa Holdings

Following the latest results, Banxa Holdings' three analysts are now forecasting revenues of AU$66.2m in 2022. This would be a sizeable 20% improvement in sales compared to the last 12 months. Banxa Holdings is also expected to turn profitable, with statutory earnings of AU$0.14 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of AU$66.2m and earnings per share (EPS) of AU$0.079 in 2022. Although the revenue estimates have not really changed, we can see there's been a massive increase in 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$8.00, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Banxa Holdings analyst has a price target of CA$12.04 per share, while the most pessimistic values it at CA$3.96. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's pretty clear that there is an expectation that Banxa Holdings' revenue growth will slow down substantially, with revenues to the end of 2022 expected to display 28% growth on an annualised basis. This is compared to a historical growth rate of 611% over the past year. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 15% per year. So it's pretty clear that, while Banxa Holdings' revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Banxa Holdings following these results. 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$8.00, 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 Banxa Holdings. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Banxa Holdings analysts - going out to 2023, and you can see them free on our platform here.

Even so, be aware that Banxa Holdings is showing 2 warning signs in our investment analysis , you should know about...

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.