Results: Barnes & Noble Education, Inc. Exceeded Expectations And The Consensus Has Updated Its Estimates

Investors in Barnes & Noble Education, Inc. (NYSE:BNED) had a good week, as its shares rose 7.1% to close at US$3.75 following the release of its second-quarter results. It was a solid earnings report, with revenues and earnings both coming in very strong. Revenues were 14% higher than the analysts had forecast, at US$595m, while the company also delivered a surprise statutory profit, against analyst expectations of a loss. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

Check out our latest analysis for Barnes & Noble Education

Taking into account the latest results, the two analysts covering Barnes & Noble Education provided consensus estimates of US$1.44b revenue in 2021, which would reflect a measurable 7.5% decline on its sales over the past 12 months. Losses are forecast to narrow 8.1% to US$1.54 per share. Before this latest report, the consensus had been expecting revenues of US$1.44b and US$1.76 per share in losses. Although the revenue estimates have not really changed Barnes & Noble Education'sfuture looks a little different to the past, with a the loss per share forecasts in particular.

These new estimates led to the consensus price target rising 38% to US$5.50, with lower forecast losses suggesting things could be looking up for Barnes & Noble Education.

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 sales are expected to reverse, with the forecast 7.5% revenue decline a notable change from historical growth of 0.3% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 9.8% annually for the foreseeable future. It's pretty clear that Barnes & Noble Education's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Barnes & Noble Education's revenues are expected to perform worse 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.

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 analyst estimates for Barnes & Noble Education going out as far as 2022, and you can see them free on our platform here.

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 3 warning signs with Barnes & Noble Education (at least 1 which is a bit unpleasant) , and understanding these should be part of your investment process.

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