Echo Global Logistics, Inc. (NASDAQ:ECHO) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. The consensus estimated revenue numbers rose, with their view now clearly much more bullish on the company's business prospects. Investor sentiment seems to be improving too, with the share price up 5.3% to US$33.15 over the past 7 days. It will be interesting to see if this latest upgrade is enough to kickstart further buying interest in the stock.
Following the upgrade, the most recent consensus for Echo Global Logistics from its ten analysts is for revenues of US$3.3b in 2021 which, if met, would be a substantial 31% increase on its sales over the past 12 months. Statutory earnings per share are presumed to leap 176% to US$1.68. Prior to this update, the analysts had been forecasting revenues of US$2.9b and earnings per share (EPS) of US$1.56 in 2021. The forecasts seem more optimistic now, with a solid increase in revenue and a modest lift to earnings per share estimates.
With these upgrades, we're not surprised to see that the analysts have lifted their price target 6.0% to US$35.50 per share. 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. There are some variant perceptions on Echo Global Logistics, with the most bullish analyst valuing it at US$42.00 and the most bearish at US$25.50 per share. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Echo Global Logistics shareholders.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Echo Global Logistics' past performance and to peers in the same industry. It's clear from the latest estimates that Echo Global Logistics' rate of growth is expected to accelerate meaningfully, with the forecast 43% annualised revenue growth to the end of 2021 noticeably faster than its historical growth of 8.1% p.a. 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 5.3% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Echo Global Logistics to grow faster than the wider industry.
The Bottom Line
The most important thing to take away from this upgrade is that analysts upgraded their earnings per share estimates for this year, expecting improving business conditions. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. There was also a nice increase in the price target, with analysts apparently feeling that the intrinsic value of the business is improving. Seeing the dramatic upgrade to this year's forecasts, it might be time to take another look at Echo Global Logistics.
Using these estimates as a starting point, we've run a discounted cash flow calculation (DCF) on Echo Global Logistics that suggests the company could be somewhat undervalued. For more information, you can click through to our platform to learn more about our valuation approach.
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
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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