Savaria Corporation (TSE:SIS) shareholders are probably feeling a little disappointed, since its shares fell 5.8% to CA$13.47 in the week after its latest quarterly results. The result was positive overall - although revenues of CA$91m were in line with what the analysts predicted, Savaria surprised by delivering a statutory profit of CA$0.16 per share, modestly greater than expected. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
See our latest analysis for Savaria
Taking into account the latest results, the current consensus from Savaria's seven analysts is for revenues of CA$388.7m in 2021, which would reflect a satisfactory 7.9% increase on its sales over the past 12 months. Per-share earnings are expected to swell 12% to CA$0.62. Yet prior to the latest earnings, the analysts had been anticipated revenues of CA$386.6m and earnings per share (EPS) of CA$0.65 in 2021. The analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share numbers for next year.
It might be a surprise to learn that the consensus price target was broadly unchanged at CA$17.47, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. 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 Savaria at CA$18.00 per share, while the most bearish prices it at CA$15.50. This is a very narrow spread of estimates, implying either that Savaria 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. We would highlight that Savaria's revenue growth is expected to slow, with forecast 7.9% increase next year well below the historical 31%p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 15% next year. Factoring in the forecast slowdown in growth, it seems obvious that Savaria is also expected to grow slower than other industry participants.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Savaria's revenues are expected to perform worse than the wider industry. The consensus price target held steady at CA$17.47, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn't be too quick to come to a conclusion on Savaria. Long-term earnings power is much more important than next year's profits. We have forecasts for Savaria going out to 2022, and you can see them free on our platform here.
Before you take the next step you should know about the 2 warning signs for Savaria that we have uncovered.
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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