Yahoo Finance Radware Ltd. Beat Analyst Estimates: See What The Consensus Is Forecasting For Next Year
It's been a good week for Radware Ltd. (NASDAQ:RDWR) shareholders, because the company has just released its latest quarterly results, and the shares gained 7.2% to US$24.12. Revenues were US$63m, approximately in line with whatthe analysts expected, although statutory earnings per share (EPS) crushed expectations, coming in at US$0.08, an impressive 60% ahead of estimates. 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've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
See our latest analysis for Radware
Taking into account the latest results, the current consensus from Radware's four analysts is for revenues of US$269.3m in 2021, which would reflect a decent 8.4% increase on its sales over the past 12 months. Statutory earnings per share are predicted to leap 25% to US$0.38. In the lead-up to this report, the analysts had been modelling revenues of US$268.9m and earnings per share (EPS) of US$0.44 in 2021. So there's definitely been a decline in sentiment after the latest results, noting the real cut to new EPS forecasts.
It might be a surprise to learn that the consensus price target was broadly unchanged at US$27.80, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on 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. The most optimistic Radware analyst has a price target of US$30.00 per share, while the most pessimistic values it at US$26.00. This is a very narrow spread of estimates, implying either that Radware is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's clear from the latest estimates that Radware's rate of growth is expected to accelerate meaningfully, with the forecast 8.4% revenue growth noticeably faster than its historical growth of 4.9%p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 3.2% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Radware to grow faster than the wider industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Radware. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. The consensus price target held steady at US$27.80, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn't be too quick to come to a conclusion on Radware. Long-term earnings power is much more important than next year's profits. We have forecasts for Radware going out to 2023, and you can see them free on our platform here.
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with Radware , and understanding it should be part of your investment process.
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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