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It's been a pretty great week for Olin Corporation (NYSE:OLN) shareholders, with its shares surging 19% to US$61.98 in the week since its latest first-quarter results. Olin reported US$2.5b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$2.48 beat expectations, being 7.5% higher than what the analysts expected. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Olin after the latest results.
After the latest results, the eleven analysts covering Olin are now predicting revenues of US$10.1b in 2022. If met, this would reflect a credible 6.7% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to rise 2.0% to US$9.72. In the lead-up to this report, the analysts had been modelling revenues of US$9.63b and earnings per share (EPS) of US$8.94 in 2022. It looks like there's been a modest increase in sentiment following the latest results, withthe analysts becoming a bit more optimistic in their predictions for both revenues and earnings.
Althoughthe analysts have upgraded their earnings estimates, there was no change to the consensus price target of US$76.50, suggesting that the forecast performance does not have a long term impact on the company's 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 Olin, with the most bullish analyst valuing it at US$100.00 and the most bearish at US$58.00 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
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. It's clear from the latest estimates that Olin's rate of growth is expected to accelerate meaningfully, with the forecast 9.0% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 5.5% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 4.6% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Olin to grow faster than the wider industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Olin following these results. Happily, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider industry. The consensus price target held steady at US$76.50, 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 forecasts for Olin going out to 2024, and you can see them free on our platform here.
Before you take the next step you should know about the 3 warning signs for Olin (1 is significant!) that we have uncovered.
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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.