A week ago, NVIDIA Corporation (NASDAQ:NVDA) came out with a strong set of third-quarter numbers that could potentially lead to a re-rate of the stock. It was overall a positive result, with revenues beating expectations by 6.9% to hit US$4.7b. NVIDIA also reported a statutory profit of US$2.12, which was an impressive 25% above what the analysts had forecast. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on NVIDIA after the latest results.
Taking into account the latest results, the consensus forecast from NVIDIA's 37 analysts is for revenues of US$19.6b in 2022, which would reflect a sizeable 32% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to bounce 38% to US$8.62. In the lead-up to this report, the analysts had been modelling revenues of US$18.7b and earnings per share (EPS) of US$8.36 in 2022. It looks like there's been a modest increase in sentiment following the latest results, withthe analysts becoming a bit more optimistic in their predictions for both revenues and earnings.
Despite these upgrades,the analysts have not made any major changes to their price target of US$582, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on NVIDIA, with the most bullish analyst valuing it at US$700 and the most bearish at US$300 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the NVIDIA's past performance and to peers in the same industry. The analysts are definitely expecting NVIDIA's growth to accelerate, with the forecast 32% growth ranking favourably alongside historical growth of 19% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 9.4% next year. Factoring in the forecast acceleration in revenue, it's pretty clear that NVIDIA is expected to grow much faster than its industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around NVIDIA's earnings potential next year. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster 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 NVIDIA. 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 NVIDIA going out to 2025, 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 NVIDIA 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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