Yahoo Finance SPS Commerce, Inc. Just Beat Earnings Expectations: Here's What Analysts Think Will Happen Next
Investors in SPS Commerce, Inc. (NASDAQ:SPSC) had a good week, as its shares rose 2.5% to close at US$60.47 following the release of its annual results. The result was positive overall - although revenues of US$279m were in line with what analysts predicted, SPS Commerce surprised by delivering a statutory profit of US$0.94 per share, modestly greater than expected. Following the result, analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We've gathered the most recent statutory forecasts to see whether analysts have changed their earnings models, following these results.
See our latest analysis for SPS Commerce
Following the latest results, SPS Commerce's ten analysts are now forecasting revenues of US$307.7m in 2020. This would be a decent 10% improvement in sales compared to the last 12 months. Statutory earnings per share are forecast to dip 8.2% to US$0.88 in the same period. Before this earnings report, analysts had been forecasting revenues of US$306.9m and earnings per share (EPS) of US$0.97 in 2020. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but analysts did make a small dip in their earnings per share forecasts.
Despite cutting their earnings forecasts, analysts have lifted their price target 14% to US$70.29, suggesting that these impacts are not expected to weigh on the stock's value in the long term. 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 SPS Commerce at US$74.00 per share, while the most bearish prices it at US$68.00. Still, with such a tight range of estimates, it suggests analysts have a pretty good idea of what they think the company is worth.
Zooming out to look at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up both against past performance, and against industry growth estimates. We would highlight that SPS Commerce's revenue growth is expected to slow, with forecast 10% increase next year well below the historical 15%p.a. growth over the last five years. Compare this to the other companies in this market with analyst coverage, which are forecast to grow their revenue at 12% per year. So it's pretty clear that, while SPS Commerce's revenue growth is expected to slow, it's expected to grow roughly in line with the industry.
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. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider market. There was also a nice increase in the price target, with analysts feeling that the intrinsic value of the business is improving.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for SPS Commerce going out to 2021, and you can see them free on our platform here..
You can also see our analysis of SPS Commerce'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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