Cannae Holdings, Inc. Reported A Surprise Loss, And Analysts Have Updated Their Forecasts

Investors in Cannae Holdings, Inc. (NYSE:CNNE) had a good week, as its shares rose 5.2% to close at US$23.29 following the release of its quarterly results. Revenues fell badly short of expectations, with sales of US$175m missing analyst predictions by 23%. Unsurprisingly, the statutory profit the analysts had been forecasting evaporated, turning into a loss of US$3.15 per share. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

See our latest analysis for Cannae Holdings

Taking into account the latest results, the most recent consensus for Cannae Holdings from three analysts is for revenues of US$744.0m in 2022 which, if met, would be a credible 4.8% increase on its sales over the past 12 months. Losses are predicted to fall substantially, shrinking 37% to US$5.86. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$842.5m and losses of US$2.48 per share in 2022. So there's been quite a change-up of views after the recent consensus updates, withthe analysts making a serious cut to their revenue outlook while also expecting losses per share to increase.

The average price target was broadly unchanged at US$38.67, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the 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. There are some variant perceptions on Cannae Holdings, with the most bullish analyst valuing it at US$42.00 and the most bearish at US$35.00 per share. 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. For example, we noticed that Cannae Holdings' rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 9.9% growth to the end of 2022 on an annualised basis. That is well above its historical decline of 13% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 8.9% per year. So while Cannae Holdings' revenues are expected to improve, it seems that it is expected to grow at about the same rate as the overall industry.

The Bottom Line

The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Cannae Holdings. They also downgraded their revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider industry. The consensus price target held steady at US$38.67, with the latest estimates not enough to have an impact on their price targets.

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 Cannae Holdings going out to 2023, and you can see them free on our platform here.

You can also view our analysis of Cannae Holdings' balance sheet, and whether we think Cannae Holdings is carrying too much debt, 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.