Earnings Beat: Sharps Compliance Corp. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models

As you might know, Sharps Compliance Corp. (NASDAQ:SMED) just kicked off its latest quarterly results with some very strong numbers. Sharps Compliance beat earnings, with revenues hitting US$17m, ahead of expectations, and statutory earnings per share outperforming analyst reckonings by a solid 13%. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

View our latest analysis for Sharps Compliance

Following the latest results, Sharps Compliance's five analysts are now forecasting revenues of US$73.6m in 2021. This would be a sizeable 39% improvement in sales compared to the last 12 months. Per-share earnings are expected to leap 239% to US$0.32. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$63.3m and earnings per share (EPS) of US$0.15 in 2021. So we can see there's been a pretty clear increase in sentiment following the latest results, with both revenues and earnings per share receiving a decent lift in the latest estimates.

With these upgrades, we're not surprised to see that the analysts have lifted their price target 22% to US$14.60per share. 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 Sharps Compliance at US$15.00 per share, while the most bearish prices it at US$12.00. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Sharps Compliance 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. It's clear from the latest estimates that Sharps Compliance's rate of growth is expected to accelerate meaningfully, with the forecast 39% revenue growth noticeably faster than its historical growth of 9.9%p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 7.1% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Sharps Compliance to grow faster than the wider industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Sharps Compliance's earnings potential next year. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

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 Sharps Compliance analysts - going out to 2025, and you can see them free on our platform here.

Plus, you should also learn about the 3 warning signs we've spotted with Sharps Compliance .

If you’re looking to trade Sharps Compliance, open an account with the lowest-cost* platform trusted by professionals, Interactive Brokers. Their clients from over 200 countries and territories trade stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted

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 editorial-team (at) simplywallst.com.