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Uni-Select Inc. (TSE:UNS) Released Earnings Last Week And Analysts Lifted Their Price Target To US$8.40

Simply Wall St
·4 min read

Investors in Uni-Select Inc. (TSE:UNS) had a good week, as its shares rose 7.6% to close at CA$8.31 following the release of its third-quarter results. The results were positive, with revenue coming in at US$395m, beating analyst expectations by 5.0%. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

View our latest analysis for Uni-Select

earnings-and-revenue-growth
earnings-and-revenue-growth

Taking into account the latest results, the most recent consensus for Uni-Select from five analysts is for revenues of US$1.61b in 2021 which, if met, would be an okay 6.0% increase on its sales over the past 12 months. Uni-Select is also expected to turn profitable, with statutory earnings of US$0.21 per share. In the lead-up to this report, the analysts had been modelling revenues of US$1.62b and earnings per share (EPS) of US$0.28 in 2021. So there's definitely been a decline in sentiment after the latest results, noting the pretty serious reduction to new EPS forecasts.

Despite cutting their earnings forecasts,the analysts have lifted their price target 12% to US$8.40, suggesting that these impacts are not expected to weigh on the stock's value in the long term. 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 Uni-Select at US$12.91 per share, while the most bearish prices it at US$7.95. 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.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We can infer from the latest estimates that forecasts expect a continuation of Uni-Select'shistorical trends, as next year's 6.0% revenue growth is roughly in line with 7.4% annual revenue growth over the past five years. Juxtapose this against our data, which suggests that other companies (with analyst coverage) in the industry are forecast to see their revenues grow 5.0% per year. It's clear that while Uni-Select's revenue growth is expected to continue on its current trajectory, it's only expected to grow in line with the industry itself.

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. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Uni-Select analysts - going out to 2022, and you can see them free on our platform here.

You should always think about risks though. Case in point, we've spotted 2 warning signs for Uni-Select you should be aware of, and 1 of them is concerning.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.