Analysts Are Updating Their The Simply Good Foods Company (NASDAQ:SMPL) Estimates After Its Yearly Results

Shareholders of The Simply Good Foods Company (NASDAQ:SMPL) will be pleased this week, given that the stock price is up 13% to US$37.83 following its latest yearly results. It was a credible result overall, with revenues of US$1.2b and statutory earnings per share of US$1.08 both in line with analyst estimates, showing that Simply Good Foods is executing in line with expectations. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

Our analysis indicates that SMPL is potentially undervalued!

Taking into account the latest results, the most recent consensus for Simply Good Foods from twelve analysts is for revenues of US$1.24b in 2023 which, if met, would be a credible 6.4% increase on its sales over the past 12 months. Statutory earnings per share are predicted to leap 34% to US$1.46. In the lead-up to this report, the analysts had been modelling revenues of US$1.23b and earnings per share (EPS) of US$1.45 in 2023. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.

The analysts reconfirmed their price target of US$41.77, showing that the business is executing well and in line with expectations. 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. Currently, the most bullish analyst values Simply Good Foods at US$48.00 per share, while the most bearish prices it at US$32.00. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that Simply Good Foods' revenue growth is expected to slow, with the forecast 6.4% annualised growth rate until the end of 2023 being well below the historical 25% p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 2.4% per year. So it's pretty clear that, while Simply Good Foods' revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. The consensus price target held steady at US$41.77, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on Simply Good Foods. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Simply Good Foods analysts - going out to 2025, and you can see them free on our platform here.

We don't want to rain on the parade too much, but we did also find 1 warning sign for Simply Good Foods that you need to be mindful of.

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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.