Last week saw the newest first-quarter earnings release from good natured Products Inc. (CVE:GDNP), an important milestone in the company's journey to build a stronger business. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the most recent consensus for good natured Products from four analysts is for revenues of CA$54.3m in 2021 which, if met, would be a sizeable 225% increase on its sales over the past 12 months. Losses are predicted to fall substantially, shrinking 83% to CA$0.01. Before this earnings announcement, the analysts had been modelling revenues of CA$58.2m and losses of CA$0.01 per share in 2021.
The analysts lifted their price target 17% to CA$1.94per share, with reduced revenue estimates seemingly not expected to have a long-term impact on the intrinsic value of the business. 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 good natured Products at CA$2.00 per share, while the most bearish prices it at CA$1.85. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting good natured Products is an easy business to forecast or the the analysts are all using similar assumptions.
Of course, another way to look at these forecasts is to place them into context against the industry itself. The analysts are definitely expecting good natured Products' growth to accelerate, with the forecast 4x annualised growth to the end of 2021 ranking favourably alongside historical growth of 50% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 4.2% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect good natured Products to grow faster than 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. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for good natured Products going out to 2022, and you can see them free on our platform here..
Don't forget that there may still be risks. For instance, we've identified 4 warning signs for good natured Products (2 can't be ignored) you should be aware 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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