CLS Holdings plc (LON:CLI) investors will be delighted, with the company turning in some strong numbers with its latest results. It was overall a positive result, with revenues beating expectations by 7.4% to hit UK£139m. CLS Holdings also reported a statutory profit of UK£0.19, which was an impressive 77% 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
After the latest results, the consensus from CLS Holdings' dual analysts is for revenues of UK£112.8m in 2021, which would reflect a chunky 19% decline in sales compared to the last year of performance. Statutory earnings per share are expected to plunge 35% to UK£0.12 in the same period. Before this earnings report, the analysts had been forecasting revenues of UK£139.8m and earnings per share (EPS) of UK£0.18 in 2021. It looks like sentiment has declined substantially in the aftermath of these results, with a real cut to revenue estimates and a pretty serious reduction to earnings per share numbers as well.
The analysts made no major changes to their price target of UK£2.66, suggesting the downgrades are not expected to have a long-term impact on CLS Holdings' valuation.
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. We would highlight that sales are expected to reverse, with a forecast 19% annualised revenue decline to the end of 2021. That is a notable change from historical growth of 3.5% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 0.6% annually for the foreseeable future. It's pretty clear that CLS Holdings' revenues are expected to perform substantially worse than the wider 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. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider industry. The consensus price target held steady at UK£2.66, with the latest estimates not enough to have an impact on their price targets.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At least one analyst has provided forecasts out to 2023, which can be seen for free on our platform here.
Don't forget that there may still be risks. For instance, we've identified 4 warning signs for CLS Holdings (1 is a bit concerning) you should be aware of.
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