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A week ago, Ashland Global Holdings Inc. (NYSE:ASH) came out with a strong set of quarterly numbers that could potentially lead to a re-rate of the stock. The company beat both earnings and revenue forecasts, with revenue of US$552m, some 2.2% above estimates, and statutory earnings per share (EPS) coming in at US$0.91, 122% ahead of expectations. 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.
Taking into account the latest results, the consensus forecast from Ashland Global Holdings' nine analysts is for revenues of US$2.46b in 2021, which would reflect a modest 5.0% improvement in sales compared to the last 12 months. Ashland Global Holdings is also expected to turn profitable, with statutory earnings of US$3.69 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$2.45b and earnings per share (EPS) of US$3.49 in 2021. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.
There's been no major changes to the consensus price target of US$96.00, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. 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 Ashland Global Holdings, with the most bullish analyst valuing it at US$113 and the most bearish at US$82.00 per share. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
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. For example, we noticed that Ashland Global Holdings' rate of growth is expected to accelerate meaningfully, with revenues forecast to grow 5.0%, well above its historical decline of 12% a year over the past five years. Compare this against analyst estimates for the wider industry, which suggest that (in aggregate) industry revenues are expected to grow 6.1% next year. So although Ashland Global Holdings' revenue growth is expected to improve, it is still expected to grow slower than the industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Ashland Global Holdings' earnings potential next year. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Ashland Global Holdings' revenues are expected to perform worse than the wider industry. The consensus price target held steady at US$96.00, with the latest estimates not enough to have an impact on their price targets.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Ashland Global Holdings going out to 2023, and you can see them free on our platform here..
You can also view our analysis of Ashland Global Holdings' balance sheet, and whether we think Ashland Global Holdings is carrying too much debt, for free on our platform here.
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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