The investors in SunOpta Inc.'s (NASDAQ:STKL) will be rubbing their hands together with glee today, after the share price leapt 20% to US$10.73 in the week following its quarterly results. It was a mildly positive result, with revenues exceeding expectations at US$244m, while statutory earnings per share (EPS) of US$0.01 were in line with analyst forecasts. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
After the latest results, the five analysts covering SunOpta are now predicting revenues of US$914.3m in 2022. If met, this would reflect a satisfactory 3.1% improvement in sales compared to the last 12 months. SunOpta is also expected to turn profitable, with statutory earnings of US$0.03 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$915.6m and earnings per share (EPS) of US$0.03 in 2022. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
With the analysts reconfirming their revenue and earnings forecasts, it's surprising to see that the price target rose 12% to US$15.20. It looks as though they previously had some doubts over whether the business would live up to their expectations. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values SunOpta at US$16.00 per share, while the most bearish prices it at US$11.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. For example, we noticed that SunOpta's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 6.4% growth to the end of 2022 on an annualised basis. That is well above its historical decline of 13% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 2.6% per year. So it looks like SunOpta is expected to grow faster than its competitors, at least for a while.
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. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple SunOpta analysts - going out to 2023, and you can see them free on our platform here.
You should always think about risks though. Case in point, we've spotted 1 warning sign for SunOpta you should be aware of.
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