Investors in Franklin Covey Co. (NYSE:FC) had a good week, as its shares rose 3.4% to close at US$39.68 following the release of its annual results. It was a pretty bad result overall; while revenues were in line with expectations at US$225m, losses exploded to US$0.07 per share. Earnings are an important time for investors, as they can track a company’s performance, look at what top analysts are forecasting for next year, and see if there’s been a change in sentiment towards the company. Readers will be glad to know we’ve aggregated the latest forecasts to see whether analysts have changed their mind on Franklin Covey after the latest results.
Taking into account the latest results, the current consensus from Franklin Covey’s three analysts is for revenues of US$242m in 2020, which would reflect a satisfactory 7.6% increase on its sales over the past 12 months. Earnings are expected to improve, with Franklin Covey forecast to report a profit of US$0.43 per share. Before this earnings report, analysts had been forecasting revenues of US$245m and earnings per share (EPS) of US$0.48 in 2020. So it looks like there’s been a small decline in overall sentiment after the recent results – there’s been no major change to revenue estimates, but analysts did make a minor downgrade to their earnings per share forecasts.
Despite cutting their earnings forecasts, analysts have lifted their price target 19% to US$40.83, suggesting that these impacts are not expected to weigh on the stock’s value in the long term. 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. The most optimistic Franklin Covey analyst has a price target of US$42.50 per share, while the most pessimistic values it at US$40.00. Still, with such a tight range of estimates, it suggests analysts have a pretty good idea of what they think the company is worth.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. Analysts are definitely expecting Franklin Covey’s growth to accelerate, with the forecast 7.6% growth ranking favourably alongside historical growth of 0.9% per annum over the past five years. Other similar companies in the industry (with analyst coverage) are also forecast to grow their revenue at 6.5% per year. Factoring in the forecast acceleration in revenue, it’s pretty clear that Franklin Covey is expected to grow at about the same rate as the wider market.
The Bottom Line
The biggest highlight of the new consensus is that analysts have reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Franklin Covey. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider market. There was also a nice increase in the price target, with analysts feeling that the intrinsic value of the business is improving.
Still, the long-term prospects of the business are much more relevant than next year’s earnings. We have estimates – from multiple Franklin Covey analysts – going out to 2021, and you can see them free on our platform here.
Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.