TransAct Technologies Incorporated (NASDAQ:TACT) came out with its quarterly results last week, and we wanted to see how the business is performing and what industry forecasters think of the company following this report. Revenues were a bright spot, with US$8.3m in sales arriving 3.6% ahead of expectations, although statutory earnings didn't fare nearly so well, recording a loss of US$0.25, some 8.7% below consensus predictions. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Taking into account the latest results, the consensus forecast from TransAct Technologies' dual analysts is for revenues of US$35.9m in 2021, which would reflect a major 25% improvement in sales compared to the last 12 months. Per-share losses are supposed to see a sharp uptick, reaching US$0.97. Before this earnings announcement, the analysts had been modelling revenues of US$41.4m and losses of US$0.71 per share in 2021. There's been a definite change in sentiment in this update, with the analysts administering a notable cut to next year's revenue estimates, while at the same time increasing their loss per share forecasts.
The analysts lifted their price target 14% to US$16.00, implicitly signalling that lower earnings per share are not expected to have a longer-term impact on the stock's value.
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. For example, we noticed that TransAct Technologies' rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 35% growth to the end of 2021 on an annualised basis. That is well above its historical decline of 11% a year over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 4.6% annually. So it looks like TransAct Technologies is expected to grow faster than its competitors, at least for a while.
The Bottom Line
The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at TransAct Technologies. They also downgraded their revenue estimates, although industry data suggests that TransAct Technologies' revenues are expected to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
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 TransAct Technologies going out as far as 2023, and you can see them free on our platform here.
You still need to take note of risks, for example - TransAct Technologies has 2 warning signs we think you should be aware of.
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