American Software, Inc. Just Recorded A 186% EPS Beat: Here's What Analysts Are Forecasting Next
A week ago, American Software, Inc. (NASDAQ:AMSW.A) came out with a strong set of third-quarter numbers that could potentially lead to a re-rate of the stock. The company beat both earnings and revenue forecasts, with revenue of US$31m, some 9.8% above estimates, and statutory earnings per share (EPS) coming in at US$0.10, 186% ahead of expectations. This is an important time for investors, as they can track a company's performance in its report, look at what top analysts are forecasting for next year, and see if there has been any change to expectations for the business. We thought readers would find it interesting to see analysts' latest (statutory) post-earnings forecasts for next year.
See our latest analysis for American Software
Taking into account the latest results, the most recent consensus for American Software from twin analysts is for revenues of US$118.6m in 2021, which is an okay 5.5% increase on its sales over the past 12 months. Statutory earnings per share are forecast to drop 13% to US$0.22 in the same period. Yet prior to the latest earnings, analysts had been forecasting revenues of US$118.5m and earnings per share (EPS) of US$0.23 in 2021. Analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share forecasts for next year.
Although analysts have revised their earnings forecasts for next year, they've also lifted the consensus price target 8.3% to US$19.50, suggesting the revised estimates are not indicative of a weaker long-term future for the business.
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. Analysts are definitely expecting American Software's growth to accelerate, with the forecast 5.5% growth ranking favourably alongside historical growth of 0.8% 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 12% per year. It seems obvious that, while the future growth outlook is brighter than the recent past, analysts also expect American Software to grow slower than the wider market.
The Bottom Line
The most important thing to take away is that analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that American Software's revenues are expected to perform worse than the wider market. Analysts also upgraded their price target, suggesting that analysts believe the intrinsic value of the business is likely to improve over time.
With that in mind, we wouldn't be too quick to come to a conclusion on American Software. Long-term earnings power is much more important than next year's profits. At least one analyst has provided forecasts out to 2024, which can be seen for free on our platform here.
We also provide an overview of the American Software Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, 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.
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