Forecast: Analysts Think EuroDry Ltd.'s (NASDAQ:EDRY) Business Prospects Have Improved Drastically

EuroDry Ltd. (NASDAQ:EDRY) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with the analysts modelling a real improvement in business performance.

Following the upgrade, the current consensus from EuroDry's twin analysts is for revenues of US$58m in 2021 which - if met - would reflect a huge 123% increase on its sales over the past 12 months. The losses are expected to disappear over the next year or so, with forecasts for a profit of US$8.89 per share this year. Before this latest update, the analysts had been forecasting revenues of US$50m and earnings per share (EPS) of US$7.49 in 2021. There has definitely been an improvement in perception recently, with the analysts substantially increasing both their earnings and revenue estimates.

View our latest analysis for EuroDry

It will come as no surprise to learn that the analysts have increased their price target for EuroDry 25% to US$40.51 on the back of these upgrades. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values EuroDry at US$45.00 per share, while the most bearish prices it at US$35.00. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that the analysts have a clear view on its prospects.

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. The analysts are definitely expecting EuroDry's growth to accelerate, with the forecast 192% annualised growth to the end of 2021 ranking favourably alongside historical growth of 3.8% per annum over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 3.8% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect EuroDry to grow faster than the wider industry.

The Bottom Line

The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for this year. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. With a serious upgrade to expectations and a rising price target, it might be time to take another look at EuroDry.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have analyst estimates for EuroDry going out as far as 2022, and you can see them free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

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This article by Simply Wall St is general in nature. 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.
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