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Earnings Beat: Simpson Manufacturing Co., Inc. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models

Simpson Manufacturing Co., Inc. (NYSE:SSD) just released its latest quarterly results and things are looking bullish. Simpson Manufacturing delivered a significant beat to revenue and earnings per share (EPS) expectations, with sales hitting US$364m, some 15% above indicated. Statutory EPS were US$1.54, an impressive 56% ahead of forecasts. 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 gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

Check out our latest analysis for Simpson Manufacturing

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Following the latest results, Simpson Manufacturing's four analysts are now forecasting revenues of US$1.31b in 2021. This would be a reasonable 6.2% improvement in sales compared to the last 12 months. Statutory per share are forecast to be US$4.28, approximately in line with the last 12 months. Before this earnings report, the analysts had been forecasting revenues of US$1.25b and earnings per share (EPS) of US$3.88 in 2021. So it seems there's been a definite increase in optimism about Simpson Manufacturing's future following the latest results, with a solid gain to the earnings per share forecasts in particular.

With these upgrades, we're not surprised to see that the analysts have lifted their price target 9.2% to US$104per share. 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. The most optimistic Simpson Manufacturing analyst has a price target of US$115 per share, while the most pessimistic values it at US$95.00. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Simpson Manufacturing's past performance and to peers in the same industry. We would highlight that Simpson Manufacturing's revenue growth is expected to slow, with forecast 6.2% increase next year well below the historical 9.1%p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 4.1% next year. Even after the forecast slowdown in growth, it seems obvious that Simpson Manufacturing is also expected 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 Simpson Manufacturing following these results. Happily, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes 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 Simpson Manufacturing. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Simpson Manufacturing analysts - going out to 2022, and you can see them free on our platform here.

You still need to take note of risks, for example - Simpson Manufacturing has 1 warning sign we think you should be aware of.

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. 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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