Just In: One Analyst Has Become A Lot More Bullish On Profire Energy, Inc.'s (NASDAQ:PFIE) Earnings

Profire Energy, Inc. (NASDAQ:PFIE) shareholders will have a reason to smile today, with the covering analyst making substantial upgrades to this year's forecasts. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with the analyst modelling a real improvement in business performance. The market may be pricing in some blue sky too, with the share price gaining 19% to US$1.32 in the last 7 days. It will be interesting to see if today's upgrade is enough to propel the stock even higher.

Following the upgrade, the most recent consensus for Profire Energy from its solo analyst is for revenues of US$58m in 2023 which, if met, would be a huge 26% increase on its sales over the past 12 months. Statutory earnings per share are presumed to jump 104% to US$0.17. Before this latest update, the analyst had been forecasting revenues of US$54m and earnings per share (EPS) of US$0.095 in 2023. There's been a pretty noticeable increase in sentiment, with the analyst upgrading revenues and making a very substantial lift in earnings per share in particular.

View our latest analysis for Profire Energy

Despite these upgrades, the analyst has not made any major changes to their price target of US$2.25, 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 Profire Energy analyst has a price target of US$3.00 per share, while the most pessimistic values it at US$1.50. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Profire Energy's past performance and to peers in the same industry. For example, we noticed that Profire Energy's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 36% growth to the end of 2023 on an annualised basis. That is well above its historical decline of 8.2% a year over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 8.4% annually. So it looks like Profire Energy is expected to grow faster than its competitors, at least for a while.

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 this year. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. The lack of change in the price target is puzzling, but with a serious upgrade to this year's earnings expectations, it might be time to take another look at Profire Energy.

Better yet, our automated discounted cash flow calculation (DCF) suggests Profire Energy could be moderately undervalued. For more information, you can click through to our platform to learn more about our valuation approach.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

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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.