Yahoo Finance News Flash: Analysts Just Made A Substantial Upgrade To Their ECN Capital Corp. (TSE:ECN) Forecasts
ECN Capital Corp. (TSE:ECN) shareholders will have a reason to smile today, with the analysts making substantial upgrades to next year's forecasts. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with the analysts modelling a real improvement in business performance. Investors have been pretty optimistic on ECN Capital too, with the stock up 12% to CA$5.98 over the past week. Could this upgrade be enough to drive the stock even higher?
Following the latest upgrade, the seven analysts covering ECN Capital provided consensus estimates of US$276m revenue in 2022, which would reflect a discernible 2.1% decline on its sales over the past 12 months. Per-share earnings are expected to shoot up 83% to US$0.16. Before this latest update, the analysts had been forecasting revenues of US$226m and earnings per share (EPS) of US$0.11 in 2022. There has definitely been an improvement in perception recently, with the analysts substantially increasing both their earnings and revenue estimates.
View our latest analysis for ECN Capital
Despite these upgrades, the analysts have not made any major changes to their price target of CA$7.25, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on ECN Capital, with the most bullish analyst valuing it at CA$13.50 and the most bearish at CA$5.50 per share. We would probably assign less value to the forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. With this in mind, we wouldn't rely too heavily on the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 1.7% by the end of 2022. This indicates a significant reduction from annual growth of 28% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 5.0% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - ECN Capital is expected to lag the wider industry.
The Bottom Line
The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for next year. Fortunately, they also upgraded their revenue estimates, and are forecasting revenues to grow slower than the wider market. The lack of change in the price target is puzzling, but with a serious upgrade to next year's earnings expectations, it might be time to take another look at ECN Capital.
Better yet, our automated discounted cash flow calculation (DCF) suggests ECN Capital could be moderately undervalued. You can learn more about our valuation methodology on our platform here.
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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.
