Shareholders of CommScope Holding Company, Inc. (NASDAQ:COMM) will be pleased this week, given that the stock price is up 11% to US$9.92 following its latest quarterly results. Revenues were in line with expectations, at US$2.2b, while statutory losses ballooned to US$0.66 per share. 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.
Taking into account the latest results, CommScope Holding Company’s twelve analysts currently expect revenues in 2021 to be US$8.64b, approximately in line with the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 86% to US$0.80. Before this latest report, the consensus had been expecting revenues of US$8.61b and US$0.74 per share in losses. Overall it looks as though the analysts were a bit mixed on the latest consensus updates. Although sales forecasts held steady, the consensus also made a to its losses per share forecasts.
The consensus price target held steady at US$12.69, seemingly implying that the higher forecast losses are not expected to have a long term impact on the company’s valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values CommScope Holding Company at US$16.00 per share, while the most bearish prices it at US$10.00. As you can see, analysts are not all in agreement on the stock’s future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that CommScope Holding Company’s revenue growth is expected to slow, with forecast 0.4% increase next year well below the historical 17%p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 3.2% per year. So it’s pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than CommScope Holding Company.
The Bottom Line
The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at CommScope Holding Company. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations – although our data does suggest that CommScope Holding Company’s revenues are expected to perform worse 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.
With that in mind, we wouldn’t be too quick to come to a conclusion on CommScope Holding Company. Long-term earnings power is much more important than next year’s profits. At Simply Wall St, we have a full range of analyst estimates for CommScope Holding Company going out to 2023, and you can see them free on our platform here..
It is also worth noting that we have found 2 warning signs for CommScope Holding Company 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.