Last week saw the newest full-year earnings release from Currency Exchange International, Corp. (TSE:CXI), an important milestone in the company’s journey to build a stronger business. It was not a great result overall. While revenues of US$42m were in line with analyst predictions, earnings were less than expected, missing statutory estimates by 18% to hit US$0.46 per share. This is an important time for investors, as they can track a company’s performance in its report, look at what top analysts are forecasting for next year, and see if there has been any change to expectations for the business. We thought readers would find it interesting to see analysts’ latest (statutory) post-earnings forecasts for next year.
View our latest analysis for Currency Exchange International
TSX:CXI Past and Future Earnings, February 1st 2020
After the latest results, the sole analyst covering Currency Exchange International are now predicting revenues of US$44.4m in 2020. If met, this would reflect a reasonable 6.3% improvement in sales compared to the last 12 months. Statutory earnings per share are forecast to dip 7.9% to US$0.42 in the same period. Yet prior to the latest earnings, analysts had been forecasting revenues of US$46.1m and earnings per share (EPS) of US$0.73 in 2020. From this we can that analyst sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a large cut to earnings per share estimates.
It’ll come as no surprise then, to learn that analysts have cut their price target 23% to US$15.15.
Zooming out to look at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up both against past performance, and against industry growth estimates. We would highlight that Currency Exchange International’s revenue growth is expected to slow, with forecast 6.3% increase next year well below the historical 14%p.a. growth over the last five years. By way of comparison, other companies in this market with analyst coverage, are forecast to grow their revenue at 11% per year. So it’s pretty clear that, while revenue growth is expected to slow down, analysts still expect the wider market to grow faster than Currency Exchange International.
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. Unfortunately, analysts also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider market. Even so, earnings per share are more important to the intrinsic value of the business. 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.
Still, the long-term prospects of the business are much more relevant than next year’s earnings. At least one analyst has provided forecasts out to 2021, which can be seen for free on our platform here.
You can also see our analysis of Currency Exchange International’s Board and CEO remuneration and experience, and whether company insiders have been buying stock.
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