Results: EngageSmart, Inc. Beat Earnings Expectations And Analysts Now Have New Forecasts

EngageSmart, Inc. (NYSE:ESMT) investors will be delighted, with the company turning in some strong numbers with its latest results. The company beat both earnings and revenue forecasts, with revenue of US$74m, some 5.4% above estimates, and statutory earnings per share (EPS) coming in at US$0.04, 254% ahead of expectations. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

View our latest analysis for EngageSmart

Taking into account the latest results, the most recent consensus for EngageSmart from ten analysts is for revenues of US$297.1m in 2022 which, if met, would be a decent 15% increase on its sales over the past 12 months. EngageSmart is also expected to turn profitable, with statutory earnings of US$0.058 per share. In the lead-up to this report, the analysts had been modelling revenues of US$292.9m and earnings per share (EPS) of US$0.054 in 2022. So the consensus seems to have become somewhat more optimistic on EngageSmart's earnings potential following these results.

There's been no major changes to the consensus price target of US$29.44, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on EngageSmart, with the most bullish analyst valuing it at US$40.00 and the most bearish at US$25.00 per share. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that EngageSmart's revenue growth is expected to slow, with the forecast 32% annualised growth rate until the end of 2022 being well below the historical 41% growth over the last year. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 13% annually. So it's pretty clear that, while EngageSmart's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around EngageSmart's earnings potential 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$29.44, 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. At Simply Wall St, we have a full range of analyst estimates for EngageSmart going out to 2024, and you can see them free on our platform here..

Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.

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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.