Cantel Medical Corp. Just Recorded A 53% EPS Beat: Here's What Analysts Are Forecasting Next
It's been a sad week for Cantel Medical Corp. (NYSE:CMD), who've watched their investment drop 13% to US$42.94 in the week since the company reported its annual result. It looks like a credible result overall - although revenues of US$1.0b were what the analysts expected, Cantel Medical surprised by delivering a (statutory) profit of US$0.40 per share, an impressive 53% above what was forecast. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Cantel Medical after the latest results.
View our latest analysis for Cantel Medical
After the latest results, the six analysts covering Cantel Medical are now predicting revenues of US$1.09b in 2021. If met, this would reflect a reasonable 7.6% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to soar 149% to US$1.00. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$1.11b and earnings per share (EPS) of US$1.21 in 2021. The analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a real cut to EPS estimates.
It might be a surprise to learn that the consensus price target was broadly unchanged at US$61.00, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. 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. There are some variant perceptions on Cantel Medical, with the most bullish analyst valuing it at US$67.00 and the most bearish at US$47.00 per share. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's pretty clear that there is an expectation that Cantel Medical's revenue growth will slow down substantially, with revenues next year expected to grow 7.6%, compared to a historical growth rate of 12% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 10% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Cantel Medical.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Cantel Medical. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Cantel Medical's revenues are expected to perform worse than the wider industry. The consensus price target held steady at US$61.00, with the latest estimates not enough to have an impact on their price targets.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Cantel Medical going out to 2023, and you can see them free on our platform here.
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 4 warning signs with Cantel Medical (at least 1 which is a bit concerning) , and understanding these should be part of your investment process.
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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