Yahoo Finance CanWel Building Materials Group Ltd. Just Missed Earnings And Its EPS Looked Sad - But Analysts Have Updated Their Models
Last week, you might have seen that CanWel Building Materials Group Ltd. (TSE:CWX) released its first-quarter result to the market. The early response was not positive, with shares down 2.7% to CA$3.20 in the past week. It looks like a pretty bad result, all things considered. Although revenues of CA$327m were in line with analyst predictions, statutory earnings fell badly short, missing estimates by 67% to hit CA$0.01 per share. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Check out our latest analysis for CanWel Building Materials Group
Taking into account the latest results, the current consensus, from the seven analysts covering CanWel Building Materials Group, is for revenues of CA$1.32b in 2020, which would reflect a discernible 4.3% reduction in CanWel Building Materials Group's sales over the past 12 months. Statutory earnings per share are expected to plunge 39% to CA$0.14 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of CA$1.29b and earnings per share (EPS) of CA$0.12 in 2020. So it seems there's been a definite increase in optimism about CanWel Building Materials Group's future following the latest results, with a considerable lift to the earnings per share forecasts in particular.
As a result, it might be a surprise to see thatthe analysts have cut their price target 7.0% to CA$3.79, which could suggest the forecast improvement in performance is not expected to last. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic CanWel Building Materials Group analyst has a price target of CA$4.50 per share, while the most pessimistic values it at CA$2.50. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that sales are expected to reverse, with the forecast 4.3% revenue decline a notable change from historical growth of 12% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 5.0% next year. It's pretty clear that CanWel Building Materials Group's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around CanWel Building Materials Group's earnings potential next year. Fortunately, they also upgraded their revenue estimates, although our data indicates sales are expected to perform worse than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of CanWel Building Materials Group's future valuation.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for CanWel Building Materials Group going out to 2021, and you can see them free on our platform here.
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 3 warning signs with CanWel Building Materials Group (at least 1 which is concerning) , and understanding them should be part of your investment process.
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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. Thank you for reading.
