Yahoo Finance US$52.20 - That's What Analysts Think Arcosa, Inc. Is Worth After These Results
Arcosa, Inc. (NYSE:ACA) shares fell 4.1% to US$42.55 in the week since its latest yearly results. It was a credible result overall, with revenues of US$1.7b and statutory earnings per share of US$2.32 both in line with analyst estimates, showing that Arcosa is executing in line with expectations. 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. We thought readers would find it interesting to see analysts' latest (statutory) post-earnings forecasts for next year.
See our latest analysis for Arcosa
Taking into account the latest results, the latest consensus from Arcosa's five analysts is for revenues of US$2.06b in 2020, which would reflect a solid 18% improvement in sales compared to the last 12 months. Statutory per-share earnings are expected to be US$2.37, roughly flat on the last 12 months. Before this earnings report, analysts had been forecasting revenues of US$2.06b and earnings per share (EPS) of US$2.81 in 2020. So there's definitely been a decline in analyst sentiment after the latest results, noting the substantial drop in new EPS forecasts.
Despite cutting their earnings forecasts, analysts have lifted their price target 7.9% to US$52.20, suggesting that these impacts are not expected to weigh on the stock's value in the long term. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Arcosa, with the most bullish analyst valuing it at US$56.00 and the most bearish at US$45.00 per share. Still, with such a tight range of estimates, it suggests analysts have a pretty good idea of what they think the company is worth.
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. Analysts are definitely expecting Arcosa's growth to accelerate, with the forecast 18% growth ranking favourably alongside historical growth of 2.1% per annum over the past three years. Compare this with other companies in the same market, which are forecast to grow their revenue 3.5% next year. It seems obvious that, while the growth outlook is brighter than the recent past, analysts also expect Arcosa to grow faster than the wider market.
The Bottom Line
The most important thing to take away is that analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Happily, there were no major changes to revenue forecasts, with analysts still expecting the business 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.
With that in mind, we wouldn't be too quick to come to a conclusion on Arcosa. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Arcosa analysts - going out to 2023, and you can see them free on our platform here.
We also provide an overview of the Arcosa Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, 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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