Yahoo Finance US$58.00: That's What Analysts Think Deluxe Corporation Is Worth After Its Latest Results
It's been a mediocre week for Deluxe Corporation (NYSE:DLX) shareholders, with the stock dropping 11% to US$42.75 in the week since its latest full-year results. Revenues came in at US$2.0b, in line with forecasts and the company reported a statutory loss of US$4.65 per share, roughly in line with expectations. Following the result, 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Check out our latest analysis for Deluxe
Following last week's earnings report, Deluxe's twin analysts are forecasting 2020 revenues to be US$2.02b, approximately in line with the last 12 months. Earnings are expected to improve, with Deluxe forecast to report a statutory profit of US$3.86 per share. Before this earnings report, analysts had been forecasting revenues of US$2.00b and earnings per share (EPS) of US$4.42 in 2020. So there's definitely been a decline in analyst sentiment after the latest results, noting the real cut to new EPS forecasts.
The average analyst price target fell 7.4% to US$58.00, with reduced earnings forecasts clearly tied to a lower valuation estimate.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that Deluxe's revenue growth is expected to slow, with forecast 0.5% increase next year well below the historical 3.8%p.a. growth over the last five years. By way of comparison, other companies in this market with analyst coverage, are forecast to grow their revenue at 5.2% per 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 Deluxe.
The Bottom Line
The most important thing to take away is that analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the plus side, there were no major changes to revenue estimates; although analyst forecasts imply revenues will perform worse than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by the latest results, leading to a lower estimate of Deluxe's future valuation.
Still, the long-term prospects of the business are much more relevant than next year's earnings. We have analyst estimates for Deluxe going out as far as 2021, and you can see them free on our platform here.
It might also be worth considering whether Deluxe's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, 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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