Shareholders might have noticed that Village Farms International, Inc. (NASDAQ:VFF) filed its first-quarter result this time last week. The early response was not positive, with shares down 6.0% to US$1.26 in the past week. Village Farms International beat revenue forecasts by a solid 12%, hitting US$79m. Statutory losses also blew out, with the loss per share reaching US$0.03, some 33% bigger than the analysts expected. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Following the latest results, Village Farms International's four analysts are now forecasting revenues of US$318.3m in 2024. This would be a modest 6.4% improvement in revenue compared to the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 76% to US$0.06. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$303.3m and losses of US$0.065 per share in 2024. So there seems to have been a moderate uplift in analyst sentiment with the latest consensus release, given the upgrades to both revenue and loss per share forecasts for this year.
The consensus price target rose 14% to US$2.13, with the analysts encouraged by the higher revenue and lower forecast losses for next year. 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 Village Farms International analyst has a price target of US$2.50 per share, while the most pessimistic values it at US$1.50. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
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. It's pretty clear that there is an expectation that Village Farms International's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 8.7% growth on an annualised basis. This is compared to a historical growth rate of 17% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 2.9% per year. So it's pretty clear that, while Village Farms International's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.
The Bottom Line
The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
With that in mind, we wouldn't be too quick to come to a conclusion on Village Farms International. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Village Farms International going out to 2026, and you can see them free on our platform here..
And what about risks? Every company has them, and we've spotted 2 warning signs for Village Farms International you should know about.
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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.