Shareholders of Sportsman’s Warehouse Holdings, Inc. (NASDAQ:SPWH) will be pleased this week, given that the stock price is up 17% to US$5.96 following its latest full-year results. Sportsman’s Warehouse Holdings reported US$886m in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$0.46 beat expectations, being 8.2% higher than what 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Check out our latest analysis for Sportsman’s Warehouse Holdings
NasdaqGS:SPWH Past and Future Earnings March 29th 2020
Taking into account the latest results, the most recent consensus for Sportsman’s Warehouse Holdings from five analysts is for revenues of US$1.00b in 2021 which, if met, would be a decent 13% increase on its sales over the past 12 months. Statutory earnings per share are predicted to shoot up 35% to US$0.63. Before this earnings report, the analysts had been forecasting revenues of US$964.4m and earnings per share (EPS) of US$0.61 in 2021. It looks like there’s been a modest increase in sentiment following the latest results, withthe analysts becoming a bit more optimistic in their predictions for both revenues and earnings.
Despite these upgrades,the analysts have not made any major changes to their price target of US$9.80, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. 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 Sportsman’s Warehouse Holdings at US$12.00 per share, while the most bearish prices it at US$7.00. This shows there is still a bit of diversity in estimates, but analysts don’t appear to be totally split on the stock as though it might be a success or failure situation.
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. The analysts are definitely expecting Sportsman’s Warehouse Holdings’s growth to accelerate, with the forecast 13% growth ranking favourably alongside historical growth of 6.0% per annum 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 4.5% per year. Factoring in the forecast acceleration in revenue, it’s pretty clear that Sportsman’s Warehouse Holdings is expected to grow much faster than its industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Sportsman’s Warehouse Holdings following these results. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
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 Sportsman’s Warehouse Holdings analysts – going out to 2022, and you can see them free on our platform here.
You still need to take note of risks, for example – Sportsman’s Warehouse Holdings has 2 warning signs we think you should be aware of.
If you spot an error that warrants correction, please contact the editor at [email protected]. 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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