Results: Softchoice Corporation Exceeded Expectations And The Consensus Has Updated Its Estimates

Softchoice Corporation (TSE:SFTC) just released its latest quarterly results and things are looking bullish. It was overall a positive result, with revenues beating expectations by 9.2% to hit US$254m. Softchoice reported statutory earnings per share (EPS) US$0.12, which was a notable 20% above what the analysts had forecast. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

Check out our latest analysis for Softchoice

Taking into account the latest results, the consensus forecast from Softchoice's seven analysts is for revenues of US$989.4m in 2022, which would reflect a satisfactory 5.9% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to shoot up 93% to US$0.55. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$979.1m and earnings per share (EPS) of US$0.65 in 2022. So there's definitely been a decline in sentiment after the latest results, noting the real cut to new EPS forecasts.

The consensus price target held steady at CA$25.86, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Softchoice at CA$31.76 per share, while the most bearish prices it at CA$20.75. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We can infer from the latest estimates that forecasts expect a continuation of Softchoice'shistorical trends, as the 12% annualised revenue growth to the end of 2022 is roughly in line with the 10% annual revenue growth over the past year. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 9.0% per year. So it's pretty clear that Softchoice is forecast to grow substantially faster than its industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Happily, there were no major changes to revenue forecasts, with the business still 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 said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Softchoice going out to 2024, 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 Softchoice you should be aware of.

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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.