It’s been a pretty great week for Exchange Income Corporation (TSE:EIF) shareholders, with its shares surging 10% to CA$36.35 in the week since its latest third-quarter results. Revenues of CA$297m fell slightly short of expectations, but earnings were a definite bright spot, with statutory per-share profits of CA$0.49 an impressive 92% ahead of estimates. Earnings are an important time for investors, as they can track a company’s performance, look at what the analysts are forecasting for next year, and see if there’s been a change in sentiment towards the company. We’ve gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Following the latest results, Exchange Income’s nine analysts are now forecasting revenues of CA$1.38b in 2021. This would be a notable 14% improvement in sales compared to the last 12 months. Per-share earnings are expected to leap 141% to CA$2.77. Before this earnings report, the analysts had been forecasting revenues of CA$1.42b and earnings per share (EPS) of CA$2.56 in 2021. So it’s pretty clear that while sentiment around revenues has declined following the latest results, the analysts are now more bullish on the company’s earnings power.
There’s been no real change to the average price target of CA$39.65, with the lower revenue and higher earnings forecasts not expected to meaningfully impact the company’s valuation over a longer timeframe. The consensus price target is just an average of individual analyst targets, so – it could be handy to see how wide the range of underlying estimates is. The most optimistic Exchange Income analyst has a price target of CA$46.00 per share, while the most pessimistic values it at CA$32.00. 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.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It’s clear from the latest estimates that Exchange Income’s rate of growth is expected to accelerate meaningfully, with the forecast 14% revenue growth noticeably faster than its historical growth of 11%p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to see revenue growth of 26% next year. So it’s clear that despite the acceleration in growth, Exchange Income is expected to grow meaningfully slower than the industry average.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Exchange Income’s earnings potential next year. Unfortunately, they also downgraded their revenue estimates, and our…
Go to the news source: Results: Exchange Income Corporation Exceeded Expectations And The Consensus Has…