1300SMILES Limited Just Beat Revenue Estimates By 12%
Investors in 1300SMILES Limited (ASX:ONT) had a good week, as its shares rose 4.3% to close at AU$6.50 following the release of its half-year results. Revenues of AU$23m beat forecasts by 12%, although statutory earnings per share disappointed slightly, coming in 4.7% below expectations at AU$0.33. Earnings are an important time for investors, as they can track a company's performance, look at what top analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether analysts have changed their mind on 1300SMILES after the latest results.
Check out our latest analysis for 1300SMILES
Following the latest results, 1300SMILES's three analysts are now forecasting revenues of AU$47.2m in 2020. This would be a solid 11% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to rise 9.3% to AU$0.37. In the lead-up to this report, analysts had been modelling revenues of AU$47.5m and earnings per share (EPS) of AU$0.38 in 2020. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
Analysts reconfirmed their price target of AU$6.78, showing that the business is executing well and in line with expectations. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on 1300SMILES, with the most bullish analyst valuing it at AU$7.25 and the most bearish at AU$6.16 per share. Still, with such a tight range of estimates, it suggests analysts have a pretty good idea of what they think the company is worth.
It can be useful to take a broader overview by seeing how analyst forecasts compare, both to the 1300SMILES's past performance and to peers in the same market. Analysts are definitely expecting 1300SMILES's growth to accelerate, with the forecast 11% growth ranking favourably alongside historical growth of 3.2% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 4.8% per year. It seems obvious that, while the growth outlook is brighter than the recent past, analysts also expect 1300SMILES to grow faster than the wider market.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - and our data does suggest that 1300SMILES's revenues are expected to grow faster than the wider market. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for 1300SMILES going out to 2022, and you can see them free on our platform here..
You can also see whether 1300SMILES is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.
