Yahoo Finance Earnings Beat: RADCOM Ltd. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models
Investors in RADCOM Ltd. (NASDAQ:RDCM) had a good week, as its shares rose 5.4% to close at US$10.03 following the release of its yearly results. It looks like a credible result overall - although revenues of US$52m were what the analysts expected, RADCOM surprised by delivering a (statutory) profit of US$0.24 per share, an impressive 243% above what was forecast. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
View our latest analysis for RADCOM
Taking into account the latest results, the consensus forecast from RADCOM's dual analysts is for revenues of US$57.7m in 2024. This reflects a notable 12% improvement in revenue compared to the last 12 months. Per-share earnings are expected to shoot up 50% to US$0.37. Before this earnings announcement, the analysts had been modelling revenues of US$56.5m and losses of US$0.04 per share in 2024. So we can see there's been a pretty clear upgrade to expectations following the latest results, with a slight bump in revenues expected to lead to profitability earlier than previously forecast.
Despite these upgrades, the consensus price target fell 30% to US$14.00, perhaps signalling that the uplift in performance is not expected to last.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. The period to the end of 2024 brings more of the same, according to the analysts, with revenue forecast to display 12% growth on an annualised basis. That is in line with its 11% annual growth over the past five years. Juxtapose this against our data, which suggests that other companies (with analyst coverage) in the industry are forecast to see their revenues grow 12% per year. It's clear that while RADCOM's revenue growth is expected to continue on its current trajectory, it's only expected to grow in line with the industry itself.
The Bottom Line
The most important thing to take away is that the analysts now expect RADCOM to become profitable next year, compared to previous expectations that it would report a loss. There was also an upgrade to revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of RADCOM's future valuation.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At least one analyst has provided forecasts out to 2025, which can be seen for free on our platform here.
You should always think about risks though. Case in point, we've spotted 1 warning sign for RADCOM you should be aware of.
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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.
