Stock Analysis

Digital Media Solutions, Inc. Earnings Missed Analyst Estimates: Here's What Analysts Are Forecasting Now

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It's been a good week for Digital Media Solutions, Inc. (NYSE:DMS) shareholders, because the company has just released its latest full-year results, and the shares gained 8.7% to US$3.26. Statutory earnings per share fell badly short of expectations, coming in at US$0.06, some 63% below analyst forecasts, although revenues were okay, approximately in line with analyst estimates at US$428m. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. 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 Digital Media Solutions

NYSE:DMS Earnings and Revenue Growth March 16th 2022

Taking into account the latest results, the consensus forecast from Digital Media Solutions' three analysts is for revenues of US$467.3m in 2022, which would reflect a decent 9.2% improvement in sales compared to the last 12 months. Per-share earnings are expected to shoot up 631% to US$0.26. In the lead-up to this report, the analysts had been modelling revenues of US$467.3m and earnings per share (EPS) of US$0.26 in 2022. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.

The consensus price target fell 27% to US$6.33, suggesting that the analysts might have been a bit enthusiastic in their previous valuation - or they were expecting the company to provide stronger guidance in the annual results. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Digital Media Solutions at US$10.00 per share, while the most bearish prices it at US$7.00. 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.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that Digital Media Solutions' revenue growth is expected to slow, with the forecast 9.2% annualised growth rate until the end of 2022 being well below the historical 32% p.a. growth over the last three years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 4.0% per year. So it's pretty clear that, while Digital Media Solutions' revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous 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 Digital Media Solutions' future valuation.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Digital Media Solutions going out to 2024, and you can see them free on our platform here.

It is also worth noting that we have found 4 warning signs for Digital Media Solutions (2 make us uncomfortable!) that you need to take into consideration.

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Find out whether Digital Media Solutions is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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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.