Yahoo Finance Altium Limited Just Missed Earnings And Its EPS Looked Sad - But Analysts Have Updated Their Models
Altium Limited (ASX:ALU) shares fell 9.5% to AU$37.30 in the week since its latest half-year results. Revenues of US$97m were in line with forecasts, although statutory earnings per share (EPS) came in below expectations at US$0.18, missing estimates by 6.8%. This is an important time for investors, as they can track a company's performance in its report, look at what top analysts are forecasting for next year, and see if there has been any change to expectations for the business. We thought readers would find it interesting to see analysts' latest (statutory) post-earnings forecasts for next year.
View our latest analysis for Altium
Taking into account the latest results, the latest consensus from Altium's seven analysts is for revenues of US$203.8m in 2020, which would reflect a notable 9.2% improvement in sales compared to the last 12 months. Statutory earnings per share are forecast to dip 4.1% to US$0.39 in the same period. Before this earnings report, analysts had been forecasting revenues of US$208.1m and earnings per share (EPS) of US$0.45 in 2020. From this we can that analyst sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a real cut to earnings per share estimates.
Analysts made no major changes to their price target of AU$39.02, suggesting the downgrades are not expected to have a long-term impact on Altium's valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Altium, with the most bullish analyst valuing it at AU$46.70 and the most bearish at AU$35.50 per share. Still, with such a tight range of estimates, it suggests analysts have a pretty good idea of what they think the company is worth.
It can also be useful to step back and take a broader view of how analyst forecasts compare to Altium's performance in recent years. We would highlight that Altium's revenue growth is expected to slow, with forecast 9.2% increase next year well below the historical 19%p.a. growth over the last five years. By way of comparison, other companies in this market with analyst coverage, are forecast to grow their revenue at 20% per year. Factoring in the forecast slowdown in growth, it seems obvious that analysts still expect Altium to grow slower than the wider market.
The Bottom Line
The most important thing to take away is that analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Unfortunately, analysts also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider market. Even so, earnings per share are more important to the intrinsic value of the business. 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.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have forecasts for Altium going out to 2024, and you can see them free on our platform here.
You can also see our analysis of Altium's Board and CEO remuneration and experience, and whether company insiders have been buying stock.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.
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