Celebrations may be in order for Stride Stapled Group (NZSE:SPG) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. The consensus statutory numbers for both revenue and earnings per share (EPS) increased, with their view clearly much more bullish on the company's business prospects.
Following the upgrade, the consensus from five analysts covering Stride Stapled Group is for revenues of NZ$63m in 2022, implying a sizeable 59% decline in sales compared to the last 12 months. Statutory earnings per share are supposed to nosedive 54% to NZ$0.15 in the same period. Before this latest update, the analysts had been forecasting revenues of NZ$57m and earnings per share (EPS) of NZ$0.12 in 2022. There has definitely been an improvement in perception recently, with the analysts substantially increasing both their earnings and revenue estimates.
Although the analysts have upgraded their earnings estimates, there was no change to the consensus price target of NZ$2.49, suggesting that the forecast performance does not have a long term impact on the company's valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Stride Stapled Group, with the most bullish analyst valuing it at NZ$2.55 and the most bearish at NZ$2.36 per share. Still, with such a tight range of estimates, it suggests the analysts have a pretty good idea of what they think the company is worth.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Stride Stapled Group's past performance and to peers in the same industry. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 59% by the end of 2022. This indicates a significant reduction from annual growth of 11% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue decline 3.1% annually for the foreseeable future. The forecasts do look bearish for Stride Stapled Group, since they're expecting it to shrink faster than the industry.
The Bottom Line
The most important thing to take away from this upgrade is that analysts upgraded their earnings per share estimates for this year, expecting improving business conditions. Notably, analysts also upgraded their revenue estimates, with sales performing well although Stride Stapled Group's revenue growth is expected to trail that of the wider market. The lack of change in the price target is puzzling, but with a serious upgrade to this year's earnings expectations, it might be time to take another look at Stride Stapled Group.
Analysts are definitely bullish on Stride Stapled Group, but no company is perfect. Indeed, you should know that there are several potential concerns to be aware of, including dilutive stock issuance over the past year. You can learn more, and discover the 3 other warning signs we've identified, for free on our platform here.
Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.
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