Yahoo Finance Usio, Inc. (NASDAQ:USIO) Just Reported, And Analysts Assigned A US$3.90 Price Target
Usio, Inc. (NASDAQ:USIO) investors will be delighted, with the company turning in some strong numbers with its latest results. Results overall were solid, with revenues arriving 2.9% better than analyst forecasts at US$7.8m. Higher revenues also resulted in substantially lower statutory losses which, at US$0.06 per share, were 2.9% smaller than the analysts expected. 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 Usio after the latest results.
See our latest analysis for Usio
Taking into account the latest results, the current consensus from Usio's five analysts is for revenues of US$30.7m in 2020, which would reflect a reasonable 4.5% increase on its sales over the past 12 months. Losses are supposed to decline, shrinking 13% from last year to US$0.32. Before this latest report, the consensus had been expecting revenues of US$30.7m and US$0.40 per share in losses. While the revenue estimates were largely unchanged, sentiment seems to have improved, with the analysts upgrading revenues and making a losses per share in particular.
Even with the lower forecast losses, the analysts lowered their valuations, with the average price target falling 8.2% to US$3.90. It looks likethe analysts have become less optimistic about the overall business. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Usio, with the most bullish analyst valuing it at US$5.00 and the most bearish at US$3.00 per share. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that Usio's revenue growth is expected to slow, with forecast 4.5% increase next year well below the historical 19%p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 11% next year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Usio.
The Bottom Line
The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Usio's revenues are expected to perform worse than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Usio's future valuation.
With that in mind, we wouldn't be too quick to come to a conclusion on Usio. Long-term earnings power is much more important than next year's profits. We have forecasts for Usio going out to 2021, and you can see them free on our platform here.
Don't forget that there may still be risks. For instance, we've identified 5 warning signs for Usio (1 is a bit unpleasant) you should be aware of.
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