Coda Octopus Group, Inc. (NASDAQ:CODA) defied analyst predictions to release its quarterly results, which were ahead of market expectations. It was a solid earnings report, with revenues and statutory earnings per share (EPS) both coming in strong. Revenues were 12% higher than the analyst had forecast, at US$4.5m, while EPS were US$0.06 beating analyst models by 500%. Earnings are an important time for investors, as they can track a company's performance, look at what the analyst is forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimate to see what could be in store for next year.
After the latest results, the sole analyst covering Coda Octopus Group are now predicting revenues of US$20.0m in 2024. If met, this would reflect a solid 10% improvement in revenue compared to the last 12 months. Per-share earnings are expected to leap 28% to US$0.27. Yet prior to the latest earnings, the analyst had been anticipated revenues of US$19.6m and earnings per share (EPS) of US$0.22 in 2024. So it seems there's been a definite increase in optimism about Coda Octopus Group's future following the latest results, with a considerable lift to the earnings per share forecasts in particular.
As a result, it might be a surprise to see thatthe analyst has cut their price target 25% to US$7.50, which could suggest the forecast improvement in performance is not expected to last.
Of course, another way to look at these forecasts is to place them into context against the industry itself. One thing stands out from these estimates, which is that Coda Octopus Group is forecast to grow faster in the future than it has in the past, with revenues expected to display 14% annualised growth until the end of 2024. If achieved, this would be a much better result than the 3.0% annual decline over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 5.4% per year. So it looks like Coda Octopus Group is expected to grow faster than its competitors, at least for a while.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Coda Octopus Group's earnings potential next year. Happily, they also upgraded their revenue estimates, and are forecasting them to grow faster than the wider industry. Furthermore, the analyst also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
With that in mind, we wouldn't be too quick to come to a conclusion on Coda Octopus Group. Long-term earnings power is much more important than next year's profits. We have analyst estimates for Coda Octopus Group going out as far as 2025, 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 Coda Octopus Group that we have uncovered.
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