SPS Commerce, Inc. Just Recorded A 92% EPS Beat: Here's What Analysts Are Forecasting Next

It's been a good week for SPS Commerce, Inc. (NASDAQ:SPSC) shareholders, because the company has just released its latest first-quarter results, and the shares gained 8.1% to US$179. It looks like a credible result overall - although revenues of US$150m were what the analysts expected, SPS Commerce surprised by delivering a (statutory) profit of US$0.48 per share, an impressive 92% above what was forecast. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

View our latest analysis for SPS Commerce

After the latest results, the nine analysts covering SPS Commerce are now predicting revenues of US$622.0m in 2024. If met, this would reflect a meaningful 11% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to accumulate 6.2% to US$1.97. Before this earnings report, the analysts had been forecasting revenues of US$619.1m and earnings per share (EPS) of US$1.73 in 2024. Although the revenue estimates have not really changed, we can see there's been a nice gain to earnings per share expectations, suggesting that the analysts have become more bullish after the latest result.

The consensus price target was unchanged at US$205, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. 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 SPS Commerce at US$225 per share, while the most bearish prices it at US$178. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We can infer from the latest estimates that forecasts expect a continuation of SPS Commerce'shistorical trends, as the 15% annualised revenue growth to the end of 2024 is roughly in line with the 16% annual growth over the past five years. Juxtapose this against our data, which suggests that other companies (with analyst coverage) in the industry are forecast to see their revenues grow 13% per year. So although SPS Commerce is expected to maintain its revenue growth rate, it's only growing at about the rate of the wider industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around SPS Commerce's earnings potential next year. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. The consensus price target held steady at US$205, with the latest estimates not enough to have an impact on their price targets.

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 SPS Commerce analysts - going out to 2026, and you can see them free on our platform here.

You should always think about risks though. Case in point, we've spotted 1 warning sign for SPS Commerce you should be aware of.

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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.