Craneware plc (LON:CRW) shareholders are probably feeling a little disappointed, since its shares fell 2.1% to UK£16.05 in the week after its latest annual results. Craneware reported US$71m in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$0.62 beat expectations, being 8.4% higher than what the analysts expected. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
After the latest results, the five analysts covering Craneware are now predicting revenues of US$73.3m in 2021. If met, this would reflect a reasonable 2.6% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to decrease 4.6% to US$0.60 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$74.3m and earnings per share (EPS) of US$0.59 in 2021. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
There were no changes to revenue or earnings estimates or the price target of US$27.67, suggesting that the company has met expectations in its recent result. 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. There are some variant perceptions on Craneware, with the most bullish analyst valuing it at US$30.39 and the most bearish at US$11.82 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's pretty clear that there is an expectation that Craneware's revenue growth will slow down substantially, with revenues next year expected to grow 2.6%, compared to a historical growth rate of 11% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 19% next year. Factoring in the forecast slowdown in growth, it seems obvious that Craneware is also expected to grow slower than other industry participants.
The Bottom Line
The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Craneware's revenues are expected to perform worse than the wider industry. 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.
With that in mind, we wouldn't be too quick to come to a conclusion on Craneware. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Craneware going out to 2024, and you can see them free on our platform here..
We don't want to rain on the parade too much, but we did also find 1 warning sign for Craneware that you need to be mindful of.
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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