The quarterly results for Winpak Ltd. (TSE:WPK) were released last week, making it a good time to revisit its performance. Winpak reported in line with analyst predictions, delivering revenues of US$211m and statutory earnings per share of US$0.41, suggesting the business is executing well and in line with its plan. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Taking into account the latest results, the current consensus from Winpak's five analysts is for revenues of US$886.3m in 2021, which would reflect a credible 3.3% increase on its sales over the past 12 months. Statutory earnings per share are predicted to accumulate 3.1% to US$1.68. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$882.3m and earnings per share (EPS) of US$1.69 in 2021. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
The analysts reconfirmed their price target of US$37.62, showing that the business is executing well and in line with expectations. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Winpak analyst has a price target of US$52.07 per share, while the most pessimistic values it at US$47.06. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Winpak's past performance and to peers in the same industry. It's clear from the latest estimates that Winpak's rate of growth is expected to accelerate meaningfully, with the forecast 3.3% revenue growth noticeably faster than its historical growth of 1.9%p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 3.5% next year. Factoring in the forecast acceleration in revenue, it's pretty clear that Winpak is expected to grow at about the same rate as the wider industry.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall industry. The consensus price target held steady at US$37.62, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn't be too quick to come to a conclusion on Winpak. Long-term earnings power is much more important than next year's profits. We have forecasts for Winpak going out to 2022, and you can see them free on our platform here.
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.
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