EZCORP, Inc. (NASDAQ:EZPW) Analysts Just Trimmed Their Revenue Forecasts By 17%

The latest analyst coverage could presage a bad day for EZCORP, Inc. (NASDAQ:EZPW), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Revenue estimates were cut sharply as the analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well. Investors however, have been notably more optimistic about EZCORP recently, with the stock price up a worthy 13% to US$6.54 in the past week. Whether the downgrade will have a negative impact on demand for shares is yet to be seen.

Following the latest downgrade, the twin analysts covering EZCORP provided consensus estimates of US$563m revenue in 2021, which would reflect a concerning 24% decline on its sales over the past 12 months. Prior to the latest estimates, the analysts were forecasting revenues of US$677m in 2021. The consensus view seems to have become more pessimistic on EZCORP, noting the measurable cut to revenue estimates in this update.

Check out our latest analysis for EZCORP

Additionally, the consensus price target for EZCORP increased 8.0% to US$6.75, showing a clear increase in optimism from the analysts involved. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values EZCORP at US$8.00 per share, while the most bearish prices it at US$5.50. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await EZCORP shareholders.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the EZCORP'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 42% by the end of 2021. This indicates a significant reduction from annual growth of 3.0% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 8.8% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - EZCORP is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their revenue estimates for this year. They're also anticipating slower revenue growth than the wider market. There was also an increase in the price target, suggesting that there is more optimism baked into the forecasts than there was previously. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on EZCORP after today.

Thirsting for more data? At least one of EZCORP's twin analysts has provided estimates 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 downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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