Last week saw the newest half-year earnings release from Straker Translations Limited (ASX:STG), an important milestone in the company's journey to build a stronger business. Revenues were NZ$23m, with Straker Translations reporting some 3.6% below analyst expectations. Following the result, the analysts have 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 analysts latest (statutory) post-earnings forecasts for next year.
Check out our latest analysis for Straker Translations
After the latest results, the dual analysts covering Straker Translations are now predicting revenues of NZ$51.2m in 2022. If met, this would reflect a substantial 29% improvement in sales compared to the last 12 months. Losses are expected to be contained, narrowing 20% from last year to NZ$0.11. Yet prior to the latest earnings, the analysts had been forecasting revenues of NZ$52.6m and losses of NZ$0.044 per share in 2022. While this year's revenue estimates dropped there was also a sizeable expansion in loss per share expectations, suggesting the consensus has a bit of a mixed view on the stock.
The average price target was broadly unchanged at AU$2.36, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. The analysts are definitely expecting Straker Translations' growth to accelerate, with the forecast 65% annualised growth to the end of 2022 ranking favourably alongside historical growth of 18% per annum over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 5.2% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Straker Translations is expected to grow much faster than its industry.
The Bottom Line
The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Straker Translations. They also downgraded their revenue estimates, although industry data suggests that Straker Translations' revenues are expected to grow faster than the wider industry. 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.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have analyst estimates for Straker Translations going out as far as 2024, and you can see them free on our platform here.
It is also worth noting that we have found 3 warning signs for Straker Translations that you need to take into consideration.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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