Earnings Beat: SciPlay Corporation Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models

Last week, you might have seen that SciPlay Corporation (NASDAQ:SCPL) released its annual result to the market. The early response was not positive, with shares down 6.7% to US$9.83 in the past week. It looks like a credible result overall - although revenues of US$466m were what analysts expected, SciPlay surprised by delivering a (statutory) profit of US$1.43 per share, an impressive 21% above what analysts had forecast. This is an important time for investors, as they can track a company's performance in its report, look at what top analysts are forecasting for next year, and see if there has been any change to expectations for the business. We thought readers would find it interesting to see analysts' latest (statutory) post-earnings forecasts for next year.

View our latest analysis for SciPlay

After the latest results, the 13 analysts covering SciPlay are now predicting revenues of US$506.5m in 2020. If met, this would reflect a solid 8.7% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to sink 11% to US$1.26 in the same period. Yet prior to the latest earnings, analysts had been forecasting revenues of US$520.9m and earnings per share (EPS) of US$1.74 in 2020. Analysts seem less optimistic after the recent results, reducing their sales forecasts and making a pretty serious reduction to earnings per share forecasts.

Analysts made no major changes to their price target of US$13.06, suggesting the downgrades are not expected to have a long-term impact on SciPlay's valuation. 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 SciPlay at US$16.00 per share, while the most bearish prices it at US$9.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

Further, we can compare these estimates to past performance, and see how SciPlay forecasts compare to the wider market's forecast performance. We would highlight that SciPlay's revenue growth is expected to slow, with forecast 8.7% increase next year well below the historical 12%p.a. growth over the last year. Juxtapose this against the other companies in the market with analyst coverage, which are forecast to grow their revenues (in aggregate) 10% next year. Factoring in the forecast slowdown in growth, it looks like analysts are expecting SciPlay to grow at about the same rate as the wider market.

The Bottom Line

The biggest concern with the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds could lay ahead for SciPlay. Analysts also downgraded their revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider market. The consensus price target held steady at US$13.06, with the latest estimates not enough to have an impact on analysts' estimated valuations.

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 SciPlay analysts - going out to 2023, and you can see them free on our platform here.

We also provide an overview of the SciPlay Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

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