July 25, 2024

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Envestnet, Inc. Just Released Its Yearly Results And Analysts Are Updating Their Estimates

Last week, you might have seen that Envestnet, Inc. (NYSE:ENV) released its full-year result to the market. The early response was not positive, with shares down 8.8% to US$78.99 in the past week. Revenues of US$900m were in line with expectations, although statutory losses per share were US$0.33, some 10% smaller than was expected. Analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We thought readers would find it interesting to see analysts’ latest (statutory) post-earnings forecasts for next year.

View our latest analysis for Envestnet

NYSE:ENV Past and Future Earnings, February 22nd 2020

Taking into account the latest results, the latest consensus from Envestnet’s nine analysts is for revenues of US$1.02b in 2020, which would reflect a decent 14% improvement in sales compared to the last 12 months. Earnings are expected to improve, with Envestnet forecast to report a statutory profit of US$0.28 per share. In the lead-up to this report, analysts had been modelling revenues of US$1.04b and earnings per share (EPS) of US$0.41 in 2020. So there’s definitely been a decline in analyst sentiment after the latest results, noting the large cut to new EPS forecasts.

It might be a surprise to learn that the consensus price target was broadly unchanged at US$82.54, with analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. The consensus price target just an average of individual analyst targets, so – considering that the price target changed, it would be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Envestnet at US$97.00 per share, while the most bearish prices it at US$62.00. 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 Envestnet shareholders.

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. It’s pretty clear that analysts expect Envestnet’s revenue growth will slow down substantially, with revenues next year expected to grow 14%, compared to a historical growth rate of 19% over the past five years. Juxtapose this against the other companies in the market with analyst coverage, which are forecast to grow their revenues (in aggregate) 12% next year. So it’s pretty clear that, while Envestnet’s revenue growth is expected to slow, it’s expected to grow roughly in line with the industry.

The Bottom Line

The most important thing to take away is that analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall market. 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.

With that in mind, we wouldn’t be too quick to come to a conclusion on Envestnet. Long-term earnings power is much more important than next year’s profits. We have forecasts for Envestnet going out to 2024, and you can see them free on our platform here.

It might also be worth considering whether Envestnet’s debt load is appropriate, using our debt analysis tools on the Simply Wall St 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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.

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