The yearly results for Roku, Inc. (NASDAQ:ROKU) were released last week, making it a good time to revisit its performance. Revenues came in at US$1.1b, in line with forecasts and the company reported a statutory loss of US$0.52 per share, roughly in line with expectations. Following the result, 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 gathered the latest post-earnings forecasts to see what analysts' statutory forecasts suggest is in store for next year.
Following the latest results, Roku's 15 analysts are now forecasting revenues of US$1.61b in 2020. This would be a major 42% improvement in sales compared to the last 12 months. The company is expected to turn profitable, with earnings of US$1.30. Yet prior to the latest earnings, analysts had been forecasting revenues of US$1.56b and losses of US$0.41 per share in 2020.
There was no major change to the consensus price target of US$149, with growing revenues seemingly enough to offset the concern of growing losses. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Roku analyst has a price target of US$200 per share, while the most pessimistic values it at US$60.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
It can also be useful to step back and take a broader view of how analyst forecasts compare to Roku's performance in recent years. Next year brings more of the same, according to analysts, with revenue forecast to grow 42%, in line with its 35% annual growth over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 10% per year. So it's pretty clear that Roku is forecast to grow substantially faster than its market.
The Bottom Line
Fortunately, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider market. The consensus price target held steady at US$149, with the latest estimates not enough to have an impact on analysts' estimated valuations.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Roku analysts - going out to 2024, and you can see them free on our platform here.
Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.
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