Last week, you might have seen that CBIZ, Inc. (NYSE:CBZ) released its first-quarter result to the market. The early response was not positive, with shares down 2.9% to US$72.76 in the past week. Results were roughly in line with estimates, with revenues of US$494m and statutory earnings per share of US$1.53. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the most recent consensus for CBIZ from three analysts is for revenues of US$1.72b in 2024. If met, it would imply a modest 5.4% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to rise 9.2% to US$2.73. Before this earnings report, the analysts had been forecasting revenues of US$1.72b and earnings per share (EPS) of US$2.72 in 2024. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
The consensus price target rose 8.3% to US$78.00despite there being no meaningful change to earnings estimates. It could be that the analystsare reflecting the predictability of CBIZ's 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. The most optimistic CBIZ analyst has a price target of US$80.00 per share, while the most pessimistic values it at US$76.00. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.
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 CBIZ's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 7.3% growth on an annualised basis. This is compared to a historical growth rate of 13% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 5.5% annually. Even after the forecast slowdown in growth, it seems obvious that CBIZ is also expected 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. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
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 CBIZ analysts - going out to 2025, and you can see them free on our platform here.
Even so, be aware that CBIZ is showing 1 warning sign in our investment analysis , you should know about...
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