Computer Programs and Systems, Inc. (NASDAQ:CPSI) just released its latest third-quarter results and things are looking bullish. It was overall a positive result, with revenues beating expectations by 7.0% to hit US$68m. Computer Programs and Systems also reported a statutory profit of US$0.36, which was an impressive 54% above what the analysts had forecast. 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 gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Taking into account the latest results, the consensus forecast from Computer Programs and Systems' nine analysts is for revenues of US$282.2m in 2021, which would reflect a reasonable 5.2% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to expand 12% to US$1.73. In the lead-up to this report, the analysts had been modelling revenues of US$279.0m and earnings per share (EPS) of US$1.62 in 2021. So the consensus seems to have become somewhat more optimistic on Computer Programs and Systems' earnings potential following these results.
The consensus price target was unchanged at US$32.14, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. 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 Computer Programs and Systems, with the most bullish analyst valuing it at US$36.00 and the most bearish at US$27.00 per share. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Computer Programs and Systems is an easy business to forecast or the the analysts are all using similar assumptions.
Of course, another way to look at these forecasts is to place them into context against the industry itself. We can infer from the latest estimates that forecasts expect a continuation of Computer Programs and Systems'historical trends, as next year's 5.2% revenue growth is roughly in line with 5.9% annual revenue growth 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 revenues grow 19% per year. So it's pretty clear that Computer Programs and Systems is expected to grow slower than similar companies in the same industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Computer Programs and Systems following these results. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Computer Programs and Systems' revenues are expected to perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Computer Programs and Systems analysts - going out to 2024, and you can see them free on our platform here.
Before you take the next step you should know about the 3 warning signs for Computer Programs and Systems that we have uncovered.
If you decide to trade Computer Programs and Systems, use the lowest-cost* platform that is rated #1 Overall by Barron’s, Interactive Brokers. Trade stocks, options, futures, forex, bonds and funds on 135 markets, all from a single integrated account.
This article by Simply Wall St is general in nature. 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.
*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email firstname.lastname@example.org.