ACCO Brands Corporation (NYSE:ACCO) investors will be delighted, with the company turning in some strong numbers with its latest results. It was overall a positive result, with revenues beating expectations by 8.2% to hit US$444m. ACCO Brands also reported a statutory profit of US$0.20, which was an impressive 33% above what the analysts had forecast. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Taking into account the latest results, ACCO Brands' five analysts currently expect revenues in 2021 to be US$1.77b, approximately in line with the last 12 months. Statutory earnings per share are predicted to leap 24% to US$0.98. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$1.79b and earnings per share (EPS) of US$1.04 in 2021. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a minor downgrade to their earnings per share forecasts.
The average price target fell 7.0% to US$10.60, with reduced earnings forecasts clearly tied to a lower valuation estimate. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values ACCO Brands at US$14.00 per share, while the most bearish prices it at US$8.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await ACCO Brands shareholders.
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. We would highlight that ACCO Brands' revenue growth is expected to slow, with forecast 2.0% increase next year well below the historical 5.1%p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 5.8% per year. Factoring in the forecast slowdown in growth, it seems obvious that ACCO Brands is also expected to grow slower than other industry participants.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that ACCO Brands' revenues are expected to perform worse than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of ACCO Brands' future valuation.
With that in mind, we wouldn't be too quick to come to a conclusion on ACCO Brands. 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 ACCO Brands going out to 2022, and you can see them free on our platform here..
Plus, you should also learn about the 3 warning signs we've spotted with ACCO Brands (including 1 which is a bit unpleasant) .
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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