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Last week, you might have seen that Barnes Group Inc. (NYSE:B) released its annual result to the market. The early response was not positive, with shares down 6.4% to US$60.84 in the past week. Barnes Group reported in line with analyst predictions, delivering revenues of US$1.5b and statutory earnings per share of US$3.07, suggesting the business is executing well and in line with its plan. Following the result, 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 gathered the latest post-earnings forecasts to see what analysts' statutory forecasts suggest is in store for next year.
Taking into account the latest results, Barnes Group's six analysts currently expect revenues in 2020 to be US$1.46b, approximately in line with the last 12 months. Statutory earnings per share are expected to increase 4.5% to US$3.23. Before this earnings report, analysts had been forecasting revenues of US$1.51b and earnings per share (EPS) of US$3.42 in 2020. Analysts are less bullish than they were before these results, given the reduced revenue forecasts and the minor downgrade to earnings per share expectations.
Despite the cuts to forecast earnings, there was no real change to the US$68.86 price target, showing that analysts don't think the changes have a meaningful impact on the stock's intrinsic value. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Barnes Group analyst has a price target of US$78.00 per share, while the most pessimistic values it at US$57.00. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
Another way to assess these estimates is by comparing them to past performance, and seeing whether analysts are more or less bullish relative to other companies in the market. We would highlight that sales are expected to reverse, with the forecast 1.9% revenue decline a notable change from historical growth of 5.6% over the last five years. Compare this with our data, which suggests that other companies in the same market are, in aggregate, expected to see their revenue grow 2.0% next year. It's pretty clear that Barnes Group's revenues are expected to perform substantially worse than the wider market.
The Bottom Line
The most important thing to take away is that analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Unfortunately, analysts also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider market. Even so, earnings per share are more important to the intrinsic value of the business. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for Barnes Group going out to 2022, and you can see them free on our platform here..
You can also view our analysis of Barnes Group's balance sheet, and whether we think Barnes Group is carrying too much debt, for free on our platform here.
If you spot an error that warrants correction, please contact the editor at email@example.com. 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. Simply Wall St has no position in the stocks mentioned.
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