NFI Group Inc. Just Reported A Surprise Profit And Analysts Updated Their Estimates

Simply Wall St
·4 min read

Last week, you might have seen that NFI Group Inc. (TSE:NFI) released its first-quarter result to the market. The early response was not positive, with shares down 7.1% to CA$25.60 in the past week. NFI Group beat expectations by 6.5% with revenues of US$574m. It also surprised on the earnings front, with an unexpected statutory profit of US$0.11 per share a nice improvement on the losses that the analysts forecast. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

View our latest analysis for NFI Group

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Taking into account the latest results, the most recent consensus for NFI Group from nine analysts is for revenues of US$2.78b in 2021 which, if met, would be a substantial 22% increase on its sales over the past 12 months. NFI Group is also expected to turn profitable, with statutory earnings of US$0.49 per share. In the lead-up to this report, the analysts had been modelling revenues of US$2.81b and earnings per share (EPS) of US$0.55 in 2021. So there's definitely been a decline in sentiment after the latest results, noting the real cut to new EPS forecasts.

The consensus price target held steady at US$28.82, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values NFI Group at US$41.85 per share, while the most bearish prices it at US$31.86. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

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 NFI Group's growth to accelerate, with the forecast 30% annualised growth to the end of 2021 ranking favourably alongside historical growth of 5.8% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 19% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that NFI Group is expected to grow much faster than its industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for NFI Group. Happily, there were no major changes to revenue forecasts, with the business still 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.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for NFI Group going out to 2025, and you can see them free on our platform here.

Plus, you should also learn about the 3 warning signs we've spotted with NFI Group (including 1 which shouldn't be ignored) .

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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