Shareholders might have noticed that Cornerstone Building Brands, Inc. (NYSE:CNR) filed its third-quarter result this time last week. The early response was not positive, with shares down 5.4% to US$8.03 in the past week. Results overall were respectable, with statutory earnings of US$0.24 per share roughly in line with what the analysts had forecast. Revenues of US$1.2b came in 2.2% ahead of analyst predictions. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the current consensus from Cornerstone Building Brands' three analysts is for revenues of US$4.81b in 2021, which would reflect a credible 2.9% increase on its sales over the past 12 months. Earnings are expected to improve, with Cornerstone Building Brands forecast to report a statutory profit of US$0.62 per share. In the lead-up to this report, the analysts had been modelling revenues of US$4.70b and earnings per share (EPS) of US$0.48 in 2021. There's been a pretty noticeable increase in sentiment, with the analysts upgrading revenues and making a considerable lift to earnings per share in particular.
Despite these upgrades,the analysts have not made any major changes to their price target of US$10.50, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Cornerstone Building Brands analyst has a price target of US$12.00 per share, while the most pessimistic values it at US$9.00. This is a very narrow spread of estimates, implying either that Cornerstone Building Brands is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
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 pretty clear that there is an expectation that Cornerstone Building Brands' revenue growth will slow down substantially, with revenues next year expected to grow 2.9%, compared to a historical growth rate of 30% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 4.8% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Cornerstone Building Brands.
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 Cornerstone Building Brands following these results. Fortunately, they also upgraded their revenue estimates, although our data indicates sales are expected to perform worse than the wider industry. The consensus price target held steady at US$10.50, with the latest estimates not enough to have an impact on their price targets.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Cornerstone Building Brands going out to 2021, and you can see them free on our platform here..
Even so, be aware that Cornerstone Building Brands is showing 1 warning sign in our investment analysis , you should know about...
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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email firstname.lastname@example.org.