Shareholders might have noticed that Covenant Logistics Group, Inc. (NASDAQ:CVLG) filed its yearly result this time last week. The early response was not positive, with shares down 5.0% to US$20.96 in the past week. The result was positive overall – although revenues of US$1.0b were in line with what the analysts predicted, Covenant Logistics Group surprised by delivering a statutory profit of US$3.57 per share, modestly greater than 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.
Taking into account the latest results, the most recent consensus for Covenant Logistics Group from two analysts is for revenues of US$1.13b in 2022 which, if met, would be a notable 8.1% increase on its sales over the past 12 months. Statutory earnings per share are predicted to accumulate 5.7% to US$3.68. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$1.06b and earnings per share (EPS) of US$3.61 in 2022. So there seems to have been a moderate uplift in sentiment following the latest results, given the upgrades to both revenue and earnings per share forecasts for next year.
Despite these upgrades, the consensus price target fell 9.4% to US$29.00, perhaps signalling that the uplift in performance is not expected to last.
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. The period to the end of 2022 brings more of the same, according to the analysts, with revenue forecast to display 8.1% growth on an annualised basis. That is in line with its 7.2% annual growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 9.9% per year. So it’s pretty clear that Covenant Logistics Group is expected to grow slower than similar companies in the same industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Covenant Logistics Group following these results. Fortunately, they also upgraded their revenue estimates, although our data indicates sales are expected to perform worse than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Covenant Logistics Group’s future valuation.
With that said, the long-term trajectory of the company’s earnings is a lot more important than next year. We have analyst estimates for Covenant Logistics Group going out as far as 2023, and you can see them free on our platform here.
You should always think about risks though. Case in point, we’ve spotted 2 warning signs for Covenant Logistics Group you should be aware of, and 1 of them is significant.
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