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Barnes Group Inc. (NYSE:B) defied analyst predictions to release its third-quarter results, which were ahead of market expectations. Barnes Group beat earnings, with revenues hitting US$269m, ahead of expectations, and statutory earnings per share outperforming analyst reckonings by a solid 10%. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. 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 five analysts covering Barnes Group provided consensus estimates of US$1.17b revenue in 2021, which would reflect a small 3.2% decline on its sales over the past 12 months. Statutory earnings per share are predicted to ascend 12% to US$1.90. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$1.13b and earnings per share (EPS) of US$1.95 in 2021. So it's pretty clear consensus is mixed on Barnes Group after the latest results; whilethe analysts lifted revenue numbers, they also administered a minor downgrade to per-share earnings expectations.
The analysts also upgraded Barnes Group's price target 9.3% to US$42.40, implying that the higher sales are expected to generate enough value to offset the forecast decline in earnings. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Barnes Group, with the most bullish analyst valuing it at US$50.00 and the most bearish at US$36.00 per share. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that sales are expected to slow, with a forecast revenue decline of 3.2%, a significant reduction from annual growth of 3.8% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 7.4% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Barnes Group is expected to lag the wider industry.
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, they also upgraded their revenue estimates, although our data indicates sales are expected to perform worse than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
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. We have forecasts for Barnes Group going out to 2022, and you can see them free on our platform here.
It is also worth noting that we have found 3 warning signs for Barnes Group 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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