The Simply Good Foods Company Just Beat EPS By 5.8%: Here's What Analysts Think Will Happen Next

Last week, you might have seen that The Simply Good Foods Company (NASDAQ:SMPL) released its second-quarter result to the market. The early response was not positive, with shares down 5.4% to US$32.20 in the past week. The result was positive overall - although revenues of US$312m were in line with what the analysts predicted, Simply Good Foods surprised by delivering a statutory profit of US$0.33 per share, modestly greater than expected. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

View our latest analysis for Simply Good Foods

Taking into account the latest results, the current consensus from Simply Good Foods' twelve analysts is for revenues of US$1.31b in 2024. This would reflect a modest 3.1% increase on its revenue over the past 12 months. Per-share earnings are expected to accumulate 9.5% to US$1.54. In the lead-up to this report, the analysts had been modelling revenues of US$1.31b and earnings per share (EPS) of US$1.53 in 2024. 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.

With no major changes to earnings forecasts, the consensus price target fell 7.5% to US$40.45, suggesting that the analysts might have previously been hoping for an earnings upgrade. 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. There are some variant perceptions on Simply Good Foods, with the most bullish analyst valuing it at US$49.00 and the most bearish at US$34.00 per share. 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.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Simply Good Foods' revenue growth is expected to slow, with the forecast 6.3% annualised growth rate until the end of 2024 being well below the historical 18% 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) 2.7% 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. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Simply Good Foods' future valuation.

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. At Simply Wall St, we have a full range of analyst estimates for Simply Good Foods going out to 2026, and you can see them free on our platform here..

It might also be worth considering whether Simply Good Foods' debt load is appropriate, using our debt analysis tools on the Simply Wall St 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.