Sterling Check Corp. Beat Analyst Estimates: See What The Consensus Is Forecasting For This Year

Sterling Check Corp. (NASDAQ:STER) 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 7.3% to hit US$206m. Sterling Check also reported a statutory profit of US$0.12, which was an impressive 59% above what the analysts had forecast. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

See our latest analysis for Sterling Check

Taking into account the latest results, the consensus forecast from Sterling Check's eight analysts is for revenues of US$792.3m in 2022, which would reflect a satisfactory 7.0% improvement in sales compared to the last 12 months. Earnings are expected to improve, with Sterling Check forecast to report a statutory profit of US$0.48 per share. Before this earnings report, the analysts had been forecasting revenues of US$774.0m and earnings per share (EPS) of US$0.45 in 2022. It looks like there's been a modest increase in sentiment following the latest results, withthe analysts becoming a bit more optimistic in their predictions for both revenues and earnings.

Despite these upgrades,the analysts have not made any major changes to their price target of US$25.86, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Sterling Check analyst has a price target of US$29.00 per share, while the most pessimistic values it at US$18.00. 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.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that Sterling Check's revenue growth is expected to slow, with the forecast 14% annualised growth rate until the end of 2022 being well below the historical 36% growth over the last year. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 7.2% annually. So it's pretty clear that, while Sterling Check's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Sterling Check's earnings potential next year. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is 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.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Sterling Check analysts - going out to 2024, and you can see them free on our platform here.

You can also see whether Sterling Check is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.

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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.