It's shaping up to be a tough period for Telos Corporation (NASDAQ:TLS), which a week ago released some disappointing second-quarter results that could have a notable impact on how the market views the stock. Revenues missed expectations somewhat, coming in at US$53m, but statutory earnings fell catastrophically short, with a loss of US$0.28 some 25% larger than what the analysts had predicted. 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.
Following the latest results, Telos' six analysts are now forecasting revenues of US$285.8m in 2021. This would be a major 42% improvement in sales compared to the last 12 months. Losses are expected to increase slightly, to US$0.58 per share. Before this earnings announcement, the analysts had been modelling revenues of US$288.8m and losses of US$0.50 per share in 2021. While this year's revenue estimates held steady, there was also a notable increase in loss per share expectations, suggesting the consensus has a bit of a mixed view on the stock.
As a result, there was no major change to the consensus price target of US$42.33, with the analysts implicitly confirming that the business looks to be performing in line with expectations, despite higher forecast losses. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Telos at US$47.00 per share, while the most bearish prices it at US$32.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Telos shareholders.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's clear from the latest estimates that Telos' rate of growth is expected to accelerate meaningfully, with the forecast 103% annualised revenue growth to the end of 2021 noticeably faster than its historical growth of 11% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 14% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Telos to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts increased their loss per share estimates for next year. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. The consensus price target held steady at US$42.33, with the latest estimates not enough to have an impact on their price targets.
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 forecasts for Telos going out to 2023, and you can see them free on our platform here.
And what about risks? Every company has them, and we've spotted 3 warning signs for Telos you should know about.
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