Investors in Kathmandu Holdings Limited (NZSE: KMD) had a good week as its shares rose 6.3% to close at NZ $ 1.34 following the release of its half-year results. Overall, the results were respectable, with statutory profit of NZ $ 0.016 per share, roughly in line with analysts’ forecasts. Revenues of NZ $ 411 million were up 2.2% from analysts’ forecast. Profits are an important time for investors because they can follow a company’s performance, look at what analysts are forecasting for next year, and see if there has been a change in sentiment towards the company. We have put together the most recent statutory forecasts to see if analysts have changed their earnings models as a result of these results.
See our latest analysis for Kathmandu Holdings
After the latest results, the nine analysts covering Kathmandu Holdings are now forecasting NZ $ 950.4 million in revenue in 2021. If achieved, that would reflect a solid 12% improvement in sales from the past 12 months. . Statutory earnings per share are expected to jump 208% to NZ $ 0.10. Still, before the latest results, analysts were forecasting revenue of NZ $ 947.0 million and earnings per share (EPS) of NZ $ 0.083 in 2021. While revenue estimates haven’t really changed, we can see that there has been a huge increase in earnings by sharing expectations, suggesting that analysts have become more bullish after the last result.
No major changes have been made to the consensus price target of NZ $ 1.70, suggesting that improving earnings per share outlook is not enough to have a positive long-term impact. on the valuation of the action. There is another way to think about price targets, however, and that is to look at the range of price targets offered by analysts, as a wide range of estimates might suggest a different view of the possible outcomes for the market. business. There are varying perceptions on Kathmandu Holdings, with the most bullish analyst valuing it at NZ $ 1.75 and the most bearish at NZ $ 1.60 per share. This is a very narrow range of estimates, implying either that Kathmandu Holdings is an easy company to value, or – more likely – analysts are relying heavily on some key assumptions.
Looking at the big picture now, one of the ways to make sense of these forecasts is to see how they stack up against both past performance and industry growth estimates. Analysts certainly expect Kathmandu Holdings’ growth to accelerate, with an annualized growth forecast of 25% by the end of 2021 ranking favorably alongside historic growth of 15% per year over the years. last five years. Compare that with other companies in the same industry, which are expected to increase their revenues by 5.2% per year. Considering the expected acceleration in revenues, it is quite clear that Kathmandu Holdings is expected to grow much faster than its industry.
The bottom line
The most important thing here is that analysts have improved their earnings per share estimates, suggesting that there has been a marked increase in optimism towards Kathmandu Holdings as a result of these results. Fortunately, they also reconfirmed their revenue figures, suggesting that sales are moving according to expectations – and our data suggests that revenue is expected to grow faster than the industry as a whole. The consensus price target has not really changed, suggesting that the intrinsic value of the company has not undergone any major changes with the latest estimates.
Continuing this reflection, we believe that the long-term prospects of the company are much more relevant than the results of next year. We have forecasts for Kathmandu Holdings through 2025, and you can view them for free on our platform here.
In addition, you should also educate yourself about the 4 warning signs we spotted with Kathmandu Holdings (including 1 which cannot be ignored).
This Simply Wall St article is general in nature. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative material. Simply Wall St does not have any position in the mentioned stocks.
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