Analyst Estimates: Here's What Brokers Think Of Kathmandu Holdings Limited (NZSE:KMD) After Its Interim Report

It's been a good week for Kathmandu Holdings Limited (NZSE:KMD) shareholders, because the company has just released its latest interim results, and the shares gained 6.3% to NZ$1.34. Results overall were respectable, with statutory earnings of NZ$0.016 per share roughly in line with what the analysts had forecast. Revenues of NZ$411m came in 2.2% ahead of analyst predictions. 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.

Check out our latest analysis for Kathmandu Holdings

Taking into account the latest results, the current consensus from Kathmandu Holdings' nine analysts is for revenues of NZ$950.4m in 2021, which would reflect a solid 12% increase on its sales over the past 12 months. Statutory earnings per share are predicted to jump 208% to NZ$0.10. Yet prior to the latest earnings, the analysts had been anticipated revenues of NZ$947.0m and earnings per share (EPS) of NZ$0.083 in 2021. There was no real change to the revenue estimates, but the analysts do seem more bullish on earnings, given the sizeable expansion in earnings per share expectations following these results.

There's been no major changes to the consensus price target of NZ$1.70, 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 Kathmandu Holdings analyst has a price target of NZ$1.75 per share, while the most pessimistic values it at NZ$1.60. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.

Of course, another way to look at these forecasts is to place them into context against the industry itself. The analysts are definitely expecting Kathmandu Holdings' growth to accelerate, with the forecast 25% annualised growth to the end of 2021 ranking favourably alongside historical growth of 15% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 5.2% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Kathmandu Holdings is expected to grow much faster than its industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Kathmandu Holdings' earnings potential next year. 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.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Kathmandu Holdings going out to 2025, and you can see them free on our platform here.

You should always think about risks though. Case in point, we've spotted 4 warning signs for Kathmandu Holdings you should be aware of, and 1 of them doesn't sit too well with us.

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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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