Yahoo Finance Kinaxis Inc. Just Beat Earnings Expectations: Here's What Analysts Think Will Happen Next
It's been a good week for Kinaxis Inc. (TSE:KXS) shareholders, because the company has just released its latest full-year results, and the shares gained 3.9% to CA$113. The result was positive overall - although revenues of US$192m were in line with what analysts predicted, Kinaxis surprised by delivering a statutory profit of US$0.87 per share, modestly greater than expected. Earnings are an important time for investors, as they can track a company's performance, look at what top 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 analysts' latest (statutory) post-earnings forecasts for next year.
View our latest analysis for Kinaxis
Taking into account the latest results, the current consensus from Kinaxis's nine analysts is for revenues of US$212.7m in 2020, which would reflect a solid 11% increase on its sales over the past 12 months. Statutory earnings per share are expected to sink 14% to US$0.76 in the same period. Yet prior to the latest earnings, analysts had been forecasting revenues of US$210.6m and earnings per share (EPS) of US$0.76 in 2020. So it's pretty clear that, although analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
The consensus price target rose 8.3% to US$93.10 despite there being no meaningful change to earnings estimates. It could be that analysts are reflecting the predictability of Kinaxis's earnings by assigning a price premium. 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 Kinaxis, with the most bullish analyst valuing it at US$94.88 and the most bearish at US$79.85 per share. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that analysts have a clear view on its prospects.
It can also be useful to step back and take a broader view of how analyst forecasts compare to Kinaxis's performance in recent years. It's pretty clear that analysts expect Kinaxis's revenue growth will slow down substantially, with revenues next year expected to grow 11%, compared to a historical growth rate of 17% over the past five years. Compare this against other companies (with analyst forecasts) in the market, which are in aggregate expected to see revenue growth of 16% next year. So it's pretty clear that, while revenue growth is expected to slow down, analysts still expect the wider market to grow faster than Kinaxis.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Kinaxis's revenues are expected to perform worse than the wider market. There was also a nice increase in the price target, with analysts feeling that the intrinsic value of the business is improving.
Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Kinaxis analysts - going out to 2022, and you can see them free on our platform here.
We also provide an overview of the Kinaxis Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.
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