Iridium Communications Inc. (NASDAQ:IRDM) investors will be delighted, with the company turning in some strong numbers with its latest results. Revenues and losses per share were both better than expected, with revenues of US$140m leading estimates by 2.5%. Statutory losses were smaller than the analystsexpected, coming in at US$0.09 per share. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Taking into account the latest results, Iridium Communications' five analysts currently expect revenues in 2020 to be US$559.5m, approximately in line with the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 58% to US$0.53. Before this latest report, the consensus had been expecting revenues of US$560.8m and US$0.57 per share in losses. It looks like there's been a modest increase in sentiment in the recent updates, with the analysts becoming a bit more optimistic in their predictions for losses per share, even though the revenue numbers were unchanged.
The average price target held steady at US$31.00, seeming to indicate that business is performing in line with expectations. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Iridium Communications at US$33.00 per share, while the most bearish prices it at US$29.00. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Iridium Communications is an easy business to forecast or the the analysts are all using similar 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 1.7%, a significant reduction from annual growth of 7.8% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 1.3% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Iridium Communications is expected to lag the wider industry.
The Bottom Line
The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Iridium Communications' revenues are expected to perform worse than the wider industry. The consensus price target held steady at US$31.00, 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 Iridium Communications. 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 Iridium Communications 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 3 warning signs for Iridium Communications (1 is a bit concerning!) 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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