Charles & Colvard, Ltd. (NASDAQ:CTHR) shareholders will have a reason to smile today, with the covering analyst making substantial upgrades to next year's statutory forecasts. The analyst greatly increased their revenue estimates, suggesting a stark improvement in business fundamentals.
After this upgrade, Charles & Colvard's one analyst is now forecasting revenues of US$42m in 2022. This would be a huge 34% improvement in sales compared to the last 12 months. Losses are expected to turn into profits real soon, with the analyst forecasting US$0.19 in per-share earnings. Previously, the analyst had been modelling revenues of US$37m and earnings per share (EPS) of US$0.14 in 2022. So we can see there's been a pretty clear increase in analyst sentiment in recent times, with both revenues and earnings per share receiving a decent lift in the latest estimates.
It will come as no surprise to learn that the analyst has increased their price target for Charles & Colvard 30% to US$3.50 on the back of these upgrades.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's clear from the latest estimates that Charles & Colvard's rate of growth is expected to accelerate meaningfully, with the forecast 26% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 3.4% p.a. 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 9.6% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Charles & Colvard is expected to grow much faster than its industry.
The Bottom Line
The biggest takeaway for us from these new estimates is that the analyst upgraded their earnings per share estimates, with improved earnings power expected for next year. Fortunately, the analyst also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. Given that the consensus looks almost universally bullish, with a substantial increase to forecasts and a higher price target, Charles & Colvard could be worth investigating further.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At least one analyst has provided forecasts out to 2023, which can be seen for free on our platform here.
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
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