It's been a good week for Concentrix Corporation (NASDAQ:CNXC) shareholders, because the company has just released its latest quarterly results, and the shares gained 4.3% to US$63.28. Revenues were US$2.4b, approximately in line with expectations, although statutory earnings per share (EPS) performed substantially better. EPS of US$0.98 were also better than expected, beating analyst predictions by 16%. 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 current consensus from Concentrix's five analysts is for revenues of US$9.63b in 2024. This would reflect a decent 11% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to step up 12% to US$4.47. In the lead-up to this report, the analysts had been modelling revenues of US$9.60b and earnings per share (EPS) of US$4.72 in 2024. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.

It might be a surprise to learn that the consensus price target was broadly unchanged at US$88.80, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Concentrix, with the most bullish analyst valuing it at US$125 and the most bearish at US$65.00 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. The analysts are definitely expecting Concentrix's growth to accelerate, with the forecast 24% annualised growth to the end of 2024 ranking favourably alongside historical growth of 15% per annum over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 5.6% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Concentrix to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster than the wider industry. The consensus price target held steady at US$88.80, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on Concentrix. Long-term earnings power is much more important than next year's profits. We have forecasts for Concentrix going out to 2026, and you can see them free on our platform here.

You still need to take note of risks, for example - Concentrix has 4 warning signs (and 1 which shouldn't be ignored) we think you should know about.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.

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