Investors in GoDaddy Inc. (NYSE:GDDY) had a good week, as its shares rose 5.4% to close at US$80.60 following the release of its yearly results. GoDaddy reported US$3.8b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$1.42 beat expectations, being 9.7% higher than what the analysts expected. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on GoDaddy after the latest results.
Taking into account the latest results, the most recent consensus for GoDaddy from twelve analysts is for revenues of US$4.16b in 2022 which, if met, would be a solid 9.0% increase on its sales over the past 12 months. Statutory earnings per share are predicted to jump 40% to US$2.03. Before this earnings report, the analysts had been forecasting revenues of US$4.17b and earnings per share (EPS) of US$1.94 in 2022. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.
There's been no major changes to the consensus price target of US$100, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. 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 GoDaddy, with the most bullish analyst valuing it at US$126 and the most bearish at US$81.00 per share. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that GoDaddy's revenue growth is expected to slow, with the forecast 9.0% annualised growth rate until the end of 2022 being well below the historical 14% 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 14% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than GoDaddy.
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 GoDaddy following these results. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that GoDaddy's revenues are expected to perform worse 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.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple GoDaddy analysts - going out to 2024, and you can see them free on our platform here.
You should always think about risks though. Case in point, we've spotted 2 warning signs for GoDaddy you should be aware of.
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