A week ago, Lincoln Educational Services Corporation (NASDAQ:LINC) came out with a strong set of quarterly numbers that could potentially lead to a re-rate of the stock. It was overall a positive result, with revenues beating expectations by 6.5% to hit US$79m. Lincoln Educational Services also reported a statutory profit of US$0.08, which was an impressive 60% above what the analysts had forecast. 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. We’ve gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Taking into account the latest results, the most recent consensus for Lincoln Educational Services from four analysts is for revenues of US$317.3m in 2021 which, if met, would be a notable 11% increase on its sales over the past 12 months. Per-share earnings are expected to swell 12% to US$0.47. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$305.0m and earnings per share (EPS) of US$0.31 in 2021. So it seems there’s been a definite increase in optimism about Lincoln Educational Services’ future following the latest results, with a great increase in the earnings per share forecasts in particular.
It will come as no surprise to learn that the analysts have increased their price target for Lincoln Educational Services 5.8% to US$9.19on the back of these upgrades. 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 Lincoln Educational Services at US$12.00 per share, while the most bearish prices it at US$6.25. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Lincoln Educational Services’ past performance and to peers in the same industry. It’s clear from the latest estimates that Lincoln Educational Services’ rate of growth is expected to accelerate meaningfully, with the forecast 11% revenue growth noticeably faster than its historical growth of 3.6%p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 24% per year. So it’s clear that despite the acceleration in growth, Lincoln Educational Services is expected to grow meaningfully slower than the industry average.
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 Lincoln Educational Services following these results. Fortunately, they also upgraded their revenue estimates, although our data indicates sales are expected to perform worse 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 in mind, we wouldn’t be too quick to come to a conclusion on Lincoln Educational Services. Long-term earnings power is much more important than next year’s profits. We have forecasts for Lincoln Educational Services going out to 2024, and you can see them free on our platform here.
Before you take the next step you should know about the 4 warning signs for Lincoln Educational Services that we have uncovered.
This article by Simply Wall St is general in nature. 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.