Some Analysts Just Cut Their Stride Stapled Group (NZSE:SPG) Estimates
One thing we could say about the analysts on Stride Stapled Group (NZSE:SPG) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.
After the downgrade, the consensus from Stride Stapled Group's five analysts is for revenues of NZ$34m in 2021, which would reflect a disturbing 66% decline in sales compared to the last year of performance. Statutory earnings per share are presumed to accumulate 9.9% to NZ$0.076. Before this latest update, the analysts had been forecasting revenues of NZ$38m and earnings per share (EPS) of NZ$0.083 in 2021. Indeed, we can see that analyst sentiment has declined measurably after the new consensus came out, with a substantial drop in revenue estimates and a minor downgrade to EPS estimates to boot.
Check out our latest analysis for Stride Stapled Group
Analysts made no major changes to their price target of NZ$2.08, suggesting the downgrades are not expected to have a long-term impact on Stride Stapled Group'svaluation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Stride Stapled Group at NZ$2.25 per share, while the most bearish prices it at NZ$1.90. This is a very narrow spread of estimates, implying either that Stride Stapled Group is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
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. These estimates imply that sales are expected to slow, with a forecast revenue decline of 66%, a significant reduction from annual growth of 11% over the last five years. Yet aggregate analyst estimates for other companies in the industry suggest that industry revenues are forecast to decline 1.0% next year. The forecasts do look bearish for Stride Stapled Group, since they're expecting it to shrink faster than the industry.
The Bottom Line
The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Unfortunately they also cut their revenue estimates for this year, and they expect sales to lag the wider market. That said, earnings per share are more important for creating value for shareholders. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on Stride Stapled Group after today.
As you can see, the analysts clearly aren't bullish, and there might be good reason for that. We've identified some potential issues with Stride Stapled Group's financials, such as its declining profit margins. Learn more, and discover the 3 other warning signs we've identified, for free on our platform here.
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
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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