Nesco Holdings, Inc. (NYSE:NSCO) just released its annual report and things are looking bullish. Revenues and losses per share were both better than expected, with revenues of US$264m leading estimates by 3.5%. Statutory losses were smaller than analysts expected, coming in at US$0.82 per share. Earnings are an important time for investors, as they can track a company’s performance, look at what top analysts are forecasting for next year, and see if there’s been a change in sentiment towards the company. Readers will be glad to know we’ve aggregated the latest statutory forecasts to see whether analysts have changed their mind on Nesco Holdings after the latest results.
Check out our latest analysis for Nesco Holdings
Taking into account the latest results, the most recent consensus for Nesco Holdings from sole analyst is for revenues of US$346.2m in 2020, which is a sizeable 31% increase on its sales over the past 12 months. Earnings are expected to improve, with Nesco Holdings forecast to report a statutory profit of US$0.62 per share. Yet prior to the latest earnings, analysts had been forecasting revenues of US$298.0m and earnings per share (EPS) of US$293 in 2020. Although sales sentiment looks to be improving, analysts have made a pretty serious reduction to per-share earnings estimates, showing a sharp increase in pessimism after earnings.
Analysts also cut Nesco Holdings’s price target 15% to US$7.25, implying that lower forecast earnings are expected to have a more negative impact than can be offset by the increase in sales.
It can also be useful to step back and take a broader view of how analyst forecasts compare to Nesco Holdings’s performance in recent years. Analysts are definitely expecting Nesco Holdings’s growth to accelerate, with the forecast 31% growth ranking favourably alongside historical growth of 12% per annum over the past three years. Compare this with other companies in the same market, which are forecast to grow their revenue 4.6% next year. It seems obvious that, while the growth outlook is brighter than the recent past, analysts also expect Nesco Holdings to grow faster than the wider market.
The Bottom Line
The biggest concern with the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Nesco Holdings. Fortunately, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider market. Analysts also downgraded their price target, suggesting that the latest news has led analysts to become more pessimistic about the intrinsic value of the business.
With that in mind, we wouldn’t be too quick to come to a conclusion on Nesco Holdings. Long-term earnings power is much more important than next year’s profits. We have analyst estimates for Nesco Holdings going out as far as 2022, and you can see them free on our platform here.
You can also see whether Nesco Holdings is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
If you spot an error that warrants correction, please contact the editor at [email protected] 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. Simply Wall St has no position in the stocks mentioned.
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