Earnings Update: Card Factory plc (LON:CARD) Just Reported Its Full-Year Results And Analysts Are Updating Their Forecasts

The yearly results for Card Factory plc (LON:CARD) were released last week, making it a good time to revisit its performance. Revenues were in line with expectations, at UK£285m, while statutory losses ballooned to UK£0.04 per share. 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.

View our latest analysis for Card Factory

Taking into account the latest results, the current consensus from Card Factory's four analysts is for revenues of UK£340.3m in 2022, which would reflect a meaningful 19% increase on its sales over the past 12 months. Earnings are expected to improve, with Card Factory forecast to report a statutory profit of UK£0.021 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of UK£352.7m and earnings per share (EPS) of UK£0.046 in 2022. The analysts seem less optimistic after the recent results, reducing their sales forecasts and making a pretty serious reduction to earnings per share numbers.

Despite the cuts to forecast earnings, there was no real change to the UK£0.92 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Card Factory, with the most bullish analyst valuing it at UK£1.30 and the most bearish at UK£0.50 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying 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. One thing stands out from these estimates, which is that Card Factory is forecast to grow faster in the future than it has in the past, with revenues expected to display 19% annualised growth until the end of 2022. If achieved, this would be a much better result than the 1.2% annual decline over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 7.1% per year. Not only are Card Factory's revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Card Factory. They also downgraded their revenue estimates, although industry data suggests that Card Factory's revenues are expected to grow faster than the wider industry. The consensus price target held steady at UK£0.92, 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 Card Factory. Long-term earnings power is much more important than next year's profits. We have forecasts for Card Factory going out to 2024, and you can see them free on our platform here.

You still need to take note of risks, for example - Card Factory has 2 warning signs we think 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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