Waters Corporation (NYSE:WAT) Beat Earnings, And Analysts Have Been Reviewing Their Forecasts
A week ago, Waters Corporation (NYSE:WAT) came out with a strong set of third-quarter numbers that could potentially lead to a re-rate of the stock. Results were good overall, with revenues beating analyst predictions by 8.8% to hit US$594m. Statutory earnings per share (EPS) came in at US$2.03, some 9.3% above whatthe analysts had expected. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
See our latest analysis for Waters
Taking into account the latest results, the most recent consensus for Waters from 14 analysts is for revenues of US$2.43b in 2021 which, if met, would be a reasonable 5.9% increase on its sales over the past 12 months. Statutory earnings per share are predicted to climb 13% to US$9.15. In the lead-up to this report, the analysts had been modelling revenues of US$2.39b and earnings per share (EPS) of US$9.17 in 2021. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
The analysts reconfirmed their price target of US$215, showing that the business is executing well and in line with expectations. 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. Currently, the most bullish analyst values Waters at US$235 per share, while the most bearish prices it at US$180. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.
Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that Waters' rate of growth is expected to accelerate meaningfully, with the forecast 5.9% revenue growth noticeably faster than its historical growth of 3.2%p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to see revenue growth of 9.4% next year. So it's clear that despite the acceleration in growth, Waters is expected to grow meaningfully slower than the industry average.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. The consensus price target held steady at US$215, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn't be too quick to come to a conclusion on Waters. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Waters going out to 2024, and you can see them free on our platform here..
It is also worth noting that we have found 1 warning sign for Waters that you need to take into consideration.
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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