Yahoo Finance Earnings Update: Here's Why Analysts Just Lifted Their Simpson Manufacturing Co., Inc. Price Target To US$80.25
The full-year results for Simpson Manufacturing Co., Inc. (NYSE:SSD) were released last week, making it a good time to revisit its performance. It was a credible result overall, with revenues of US$1.1b and statutory earnings per share of US$2.98 both in line with analyst estimates, showing that Simpson Manufacturing is executing in line with expectations. Earnings are an important time for investors, as they can track a company's performance, look at what top analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether analysts have changed their mind on Simpson Manufacturing after the latest results.
See our latest analysis for Simpson Manufacturing
Taking into account the latest results, the current consensus from Simpson Manufacturing's four analysts is for revenues of US$1.21b in 2020, which would reflect a modest 6.2% increase on its sales over the past 12 months. Statutory earnings per share are expected to step up 15% to US$3.44. Before this earnings report, analysts had been forecasting revenues of US$1.20b and earnings per share (EPS) of US$3.52 in 2020. Analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share forecasts for next year.
Although analysts have revised their earnings forecasts for next year, they've also lifted the consensus price target 7.7% to US$80.25, suggesting the revised estimates are not indicative of a weaker long-term future for the business. 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 Simpson Manufacturing, with the most bullish analyst valuing it at US$85.00 and the most bearish at US$74.00 per share. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that analysts have a clear view on its prospects.
It can be useful to take a broader overview by seeing how analyst forecasts compare, both to the Simpson Manufacturing's past performance and to peers in the same market. It's pretty clear that analysts expect Simpson Manufacturing's revenue growth will slow down substantially, with revenues next year expected to grow 6.2%, compared to a historical growth rate of 9.2% over the past five years. Juxtapose this against the other companies in the market with analyst coverage, which are forecast to grow their revenues (in aggregate) 4.3% next year. Even after the forecast slowdown in growth, it seems obvious that analysts still thinkSimpson Manufacturing will grow faster than 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 Simpson Manufacturing. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - and our data does suggest that Simpson Manufacturing's revenues are expected to grow faster than the wider market. Analysts also upgraded their price target, suggesting that analysts believe the intrinsic value of the business is likely to improve over time.
Still, the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Simpson Manufacturing going out to 2021, and you can see them free on our platform here..
Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, 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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