Yahoo Finance K-Bro Linen Inc. Just Missed Earnings - But Analysts Have Updated Their Models
The first-quarter results for K-Bro Linen Inc. (TSE:KBL) were released last week, making it a good time to revisit its performance. Results overall were not great, with earnings of CA$0.17 per share falling drastically short of analyst expectations. Meanwhile revenues hit CA$80m and were slightly better than forecasts. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on K-Bro Linen after the latest results.
Check out our latest analysis for K-Bro Linen
Taking into account the latest results, the consensus forecast from K-Bro Linen's five analysts is for revenues of CA$358.4m in 2024. This reflects a decent 8.5% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to grow 15% to CA$1.91. Before this earnings report, the analysts had been forecasting revenues of CA$346.4m and earnings per share (EPS) of CA$2.07 in 2024. So it's pretty clear consensus is mixed on K-Bro Linen after the latest results; whilethe analysts lifted revenue numbers, they also administered a small dip in per-share earnings expectations.
There's been no major changes to the price target of CA$44.92, suggesting that the impact of higher forecast revenue and lower earnings won't result in a meaningful change to the business' valuation. 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 K-Bro Linen, with the most bullish analyst valuing it at CA$48.00 and the most bearish at CA$40.00 per share. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.
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. It's clear from the latest estimates that K-Bro Linen's rate of growth is expected to accelerate meaningfully, with the forecast 11% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 6.9% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 3.4% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that K-Bro Linen is expected to grow much faster than its industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. The consensus price target held steady at CA$44.92, with the latest estimates not enough to have an impact on their price targets.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for K-Bro Linen going out to 2026, and you can see them free on our platform here.
You can also see whether K-Bro Linen is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
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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.
