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Shareholders in Dream Unlimited Corp. (TSE:DRM) may be thrilled to learn that the covering analyst has just delivered a major upgrade to their near-term forecasts. The consensus statutory numbers for both revenue and earnings per share (EPS) increased, with their view clearly much more bullish on the company's business prospects.
Following the upgrade, the current consensus from Dream Unlimited's lone analyst is for revenues of CA$281m in 2021 which - if met - would reflect a decent 17% increase on its sales over the past 12 months. The losses are expected to disappear over the next year or so, with forecasts for a profit of CA$1.63 per share this year. Before this latest update, the analyst had been forecasting revenues of CA$251m and earnings per share (EPS) of CA$1.31 in 2021. So we can see there's been a pretty clear increase in analyst sentiment in recent times, with both revenues and earnings per share receiving a decent lift in the latest estimates.
Although the analyst has upgraded their earnings estimates, there was no change to the consensus price target of CA$34.00, suggesting that the forecast performance does not have a long term impact on the company's valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Dream Unlimited at CA$37.00 per share, while the most bearish prices it at CA$32.00. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that the analyst has a clear view on its prospects.
Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that Dream Unlimited's rate of growth is expected to accelerate meaningfully, with the forecast 38% annualised revenue growth to the end of 2021 noticeably faster than its historical growth of 7.2% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 6.6% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Dream Unlimited is expected to grow much faster than its industry.
The Bottom Line
The biggest takeaway for us from these new estimates is that the analyst upgraded their earnings per share estimates, with improved earnings power expected for this year. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. The lack of change in the price target is puzzling, but with a serious upgrade to this year's earnings expectations, it might be time to take another look at Dream Unlimited.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have analyst estimates for Dream Unlimited going out as far as 2022, and you can see them 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.
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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