Investors in The Simply Good Foods Company (NASDAQ:SMPL) had a good week, as its shares rose 3.8% to close at US$41.09 following the release of its first-quarter results. It was a credible result overall, with revenues of US$309m and statutory earnings per share of US$0.35 both in line with analyst estimates, showing that Simply Good Foods is executing in line with expectations. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
See our latest analysis for Simply Good Foods
After the latest results, the 13 analysts covering Simply Good Foods are now predicting revenues of US$1.32b in 2024. If met, this would reflect a modest 5.7% improvement in revenue compared to the last 12 months. Per-share earnings are expected to grow 16% to US$1.55. In the lead-up to this report, the analysts had been modelling revenues of US$1.32b and earnings per share (EPS) of US$1.55 in 2024. 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 consensus price target rose 8.0% to US$46.00despite there being no meaningful change to earnings estimates. It could be that the analystsare reflecting the predictability of Simply Good Foods' earnings by assigning a price premium. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Simply Good Foods at US$50.00 per share, while the most bearish prices it at US$40.00. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.
Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Simply Good Foods' revenue growth is expected to slow, with the forecast 7.7% annualised growth rate until the end of 2024 being well below the historical 20% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 2.4% annually. So it's pretty clear that, while Simply Good Foods' revenue growth is expected to slow, it's still expected to grow faster than the industry itself.
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. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue 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 Simply Good Foods. 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 Simply Good Foods going out to 2026, and you can see them free on our platform here..
You can also view our analysis of Simply Good Foods' balance sheet, and whether we think Simply Good Foods is carrying too much debt, for free 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.