GSE Systems, Inc. (NASDAQ:GVP) Consensus Forecasts Have Become A Little Darker Since Its Latest Report

GSE Systems, Inc. (NASDAQ:GVP) missed earnings with its latest quarterly results, disappointing overly-optimistic forecasts. It definitely looks like a negative result overall with revenues falling 14% short of analyst estimates at US$11m. Statutory losses were US$0.13 per share, 86% bigger than what the analyst expected. Following the result, the analyst has 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. So we gathered the latest post-earnings forecasts to see what estimate suggests is in store for next year.

View our latest analysis for GSE Systems

After the latest results, the sole analyst covering GSE Systems are now predicting revenues of US$47.6m in 2023. If met, this would reflect a modest 2.8% improvement in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 38% to US$0.39. Before this latest report, the consensus had been expecting revenues of US$55.4m and US$0.15 per share in losses. There's been a definite change in sentiment in this update, with the analyst administering a notable cut to next year's revenue estimates, while at the same time increasing their loss per share forecasts.

The analyst lifted their price target 71% to US$3.00, implicitly signalling that lower earnings per share are not expected to have a longer-term impact on the stock's value.

Of course, another way to look at these forecasts is to place them into context against the industry itself. For example, we noticed that GSE Systems' rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 3.8% growth to the end of 2023 on an annualised basis. That is well above its historical decline of 15% a year over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 12% annually for the foreseeable future. So although GSE Systems' revenue growth is expected to improve, it is still expected to grow slower than the industry.

The Bottom Line

The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at GSE Systems. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider industry. We note an upgrade to the price target, suggesting that the analyst 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 analyst estimates for GSE Systems going out as far as 2025, and you can see them free on our platform here.

Even so, be aware that GSE Systems is showing 5 warning signs in our investment analysis , and 2 of those are potentially serious...

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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.