Yahoo Finance Analysts Are Updating Their Canfor Corporation (TSE:CFP) Estimates After Its First-Quarter Results
Investors in Canfor Corporation (TSE:CFP) had a good week, as its shares rose 3.9% to close at CA$21.15 following the release of its first-quarter results. Revenues of CA$1.4b beat expectations by a respectable 7.2%, although statutory losses per share increased. Canfor lost CA$1.17, which was 118% more than what the analysts had included in their models. Following the result, the 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
View our latest analysis for Canfor
After the latest results, the consensus from Canfor's six analysts is for revenues of CA$5.69b in 2023, which would reflect a definite 14% decline in sales compared to the last year of performance. The company is forecast to report a statutory loss of CA$0.13 in 2023, a sharp decline from a profit over the last year. Yet prior to the latest earnings, the analysts had been forecasting revenues of CA$5.48b and losses of CA$0.30 per share in 2023. There's been a pretty noticeable increase in sentiment, with the analysts upgrading revenues and making a very favorable reduction to loss per share in particular.
There was no major change to the consensus price target of CA$28.27, perhaps suggesting that the analysts remain concerned about ongoing losses despite the improved earnings and revenue outlook. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Canfor at CA$33.00 per share, while the most bearish prices it at CA$22.16. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
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 annualised revenue decline of 18% by the end of 2023. This indicates a significant reduction from annual growth of 12% 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 3.4% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Canfor 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. They also upgraded their revenue estimates for next year, even though sales are expected to grow slower 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 said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Canfor 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 2 warning signs for Canfor that you need to be mindful of.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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