Shareholders will be ecstatic, with their stake up 20% over the past week following SunOpta Inc.'s (NASDAQ:STKL) latest quarterly results. SunOpta beat revenue forecasts by a solid 11% to hit US$244m. Statutory earnings per share came in at US$0.01, in line with expectations. 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.
After the latest results, the five analysts covering SunOpta are now predicting revenues of US$914.3m in 2022. If met, this would reflect a credible 3.1% improvement in sales compared to the last 12 months. SunOpta is also expected to turn profitable, with statutory earnings of US$0.03 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$915.6m and earnings per share (EPS) of US$0.03 in 2022. 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 the analysts reconfirming their revenue and earnings forecasts, it's surprising to see that the price target rose 12% to US$15.20. It looks as though they previously had some doubts over whether the business would live up to their expectations. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic SunOpta analyst has a price target of US$16.00 per share, while the most pessimistic values it at US$11.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
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. One thing stands out from these estimates, which is that SunOpta is forecast to grow faster in the future than it has in the past, with revenues expected to display 6.4% annualised growth until the end of 2022. If achieved, this would be a much better result than the 13% annual decline over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 2.6% per year. So it looks like SunOpta is expected to grow faster than its competitors, at least for a while.
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. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
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 estimates - from multiple SunOpta analysts - going out to 2023, and you can see them free on our platform here.
And what about risks? Every company has them, and we've spotted 1 warning sign for SunOpta you should know about.
What are the risks and opportunities for SunOpta?
Trading at 73.6% below our estimate of its fair value
Shareholders have been diluted in the past year
Volatile share price over the past 3 months
Has less than 1 year of cash runway
Currently unprofitable and not forecast to become profitable over the next 3 years
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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.
SunOpta Inc. engages in manufacture and sale of plant-based and fruit-based food and beverage products to retailers, foodservice operators, branded food companies, and food manufacturers in the United States, Canada, and internationally.
Good value with imperfect balance sheet.