The analyst might have been a bit too bullish on Currency Exchange International, Corp. (TSE:CXI), given that the company fell short of expectations when it released its quarterly results last week. It was not a great statutory result, with revenues coming in 28% lower than the analyst predicted. Unsurprisingly, earnings also fell seriously short of forecasts, turning into a per-share loss of US$0.35. Following the result, the analyst has updated their earnings model, and it would be good to know whether they think there’s been a strong change in the company’s prospects, or if it’s business as usual. We thought readers would find it interesting to see the analyst latest (statutory) post-earnings forecasts for next year.
See our latest analysis for Currency Exchange International
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Following the recent earnings report, the consensus from solitary analyst covering Currency Exchange International is for revenues of US$17.0m in 2021, implying a substantial 46% decline in sales compared to the last 12 months. Per-share losses are expected to explode, reaching US$1.10 per share. Yet prior to the latest earnings, the analyst had been forecasting revenues of US$30.9m and losses of US$0.19 per share in 2021. There’s been a definite change in sentiment in this update, with the analyst administering a notable cut to next year’s revenue estimates, while at the same time increasing their loss per share forecasts.
The consensus price target fell 11% to US$9.50, with the analyst clearly concerned about the company following the weaker revenue and earnings outlook.
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. These estimates imply that sales are expected to slow, with a forecast revenue decline of 46%, a significant reduction from annual growth of 12% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 8.9% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining – Currency Exchange International is expected to lag the wider industry.
The Bottom Line
The most important thing to take away is that the analyst increased their loss per share estimates for next year. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider industry. Furthermore, the analyst also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
With that in mind, we wouldn’t be too quick to come to a conclusion on Currency Exchange International. Long-term earnings power is much more important than next year’s profits. We have analyst estimates for Currency Exchange International going out as far as 2021, and you can see them free on our platform here.
It is also worth noting that we have found 2 warning signs for Currency Exchange International (1 is a bit concerning!) that you need to take into consideration.
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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