Celebrations may be in order for Parkland Corporation (TSE:PKI) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. The analysts have sharply increased their revenue numbers, with a view that Parkland will make substantially more sales than they'd previously expected.
After the upgrade, the twelve analysts covering Parkland are now predicting revenues of CA$33b in 2022. If met, this would reflect a huge 34% improvement in sales compared to the last 12 months. Before the latest update, the analysts were foreseeing CA$30b of revenue in 2022. The consensus has definitely become more optimistic, showing a solid increase in revenue forecasts.
We'd point out that there was no major changes to their price target of CA$47.47, suggesting the latest estimates were not enough to shift their view on the 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. There are some variant perceptions on Parkland, with the most bullish analyst valuing it at CA$55.00 and the most bearish at CA$34.00 per share. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Parkland shareholders.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's clear from the latest estimates that Parkland's rate of growth is expected to accelerate meaningfully, with the forecast 80% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 17% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 0.8% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Parkland to grow faster than the wider industry.
The Bottom Line
The most important thing to take away from this upgrade is that analysts lifted their revenue estimates for this year. The analysts also expect revenues to grow faster than the wider market. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at Parkland.
Analysts are definitely bullish on Parkland, but no company is perfect. Indeed, you should know that there are several potential concerns to be aware of, including the risk of cutting its dividend. You can learn more, and discover the 3 other risks we've identified, for free on our platform here.
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
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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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