Last week, you might have seen that Vectrus, Inc. (NYSE:VEC) released its first-quarter result to the market. The early response was not positive, with shares down 7.9% to US$43.99 in the past week. Results overall were respectable, with statutory earnings of US$0.74 per share roughly in line with what the analysts had forecast. Revenues of US$352m came in 4.1% ahead of analyst predictions. 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.
Taking into account the latest results, the current consensus from Vectrus' three analysts is for revenues of US$1.51b in 2020, which would reflect a credible 6.9% increase on its sales over the past 12 months. Per-share earnings are expected to expand 16% to US$3.67. Before this earnings report, the analysts had been forecasting revenues of US$1.51b and earnings per share (EPS) of US$3.70 in 2020. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
The analysts reconfirmed their price target of US$62.33, showing that the business is executing well and in line with expectations. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Vectrus at US$65.00 per share, while the most bearish prices it at US$60.00. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Vectrus' past performance and to peers in the same industry. The analysts are definitely expecting Vectrus' growth to accelerate, with the forecast 6.9% growth ranking favourably alongside historical growth of 3.2% per annum 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 4.3% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Vectrus to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster 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.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Vectrus analysts - going out to 2021, and you can see them free on our platform here.
Before you take the next step you should know about the 2 warning signs for Vectrus that we have uncovered.
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