Investors in Berry Global Group, Inc. (NYSE:BERY) had a good week, as its shares rose 8.8% to close at US$45.02 following the release of its full-year results. Revenues were US$8.9b, approximately in line with what analysts expected, although earnings per share (EPS) crushed expectations, coming in at US$3.00, an impressive 45% ahead of estimates. Earnings are an important time for investors, as they can track a company's performance, look at what top analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. Readers will be glad to know we've aggregated the latest forecasts to see whether analysts have changed their mind on Berry Global Group after the latest results.
Taking into account the latest results, the most recent consensus for Berry Global Group from nine analysts is for revenues of US$12.2b in 2020, which is a sizeable 38% increase on its sales over the past 12 months. Earnings per share are expected to surge 41% to US$4.35. Before this earnings report, analysts had been forecasting revenues of US$12.3b and earnings per share (EPS) of US$4.05 in 2020. So the consensus seems to have become somewhat more optimistic on Berry Global Group's earnings potential following these results.
The consensus price target was unchanged at US$54.42, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. 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. Currently, the most bullish analyst values Berry Global Group at US$64.00 per share, while the most bearish prices it at US$35.00. 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.
Zooming out to look at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up both against past performance, and against industry growth estimates. Analysts are definitely expecting Berry Global Group's growth to accelerate, with the forecast 38% growth ranking favourably alongside historical growth of 12% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 2.9% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Berry Global Group is expected to grow much faster than its market.
The Bottom Line
The biggest takeaway for us from these new estimates is that the consensus upgraded its earnings per share estimates, showing a clear improvement in sentiment around Berry Global Group's earnings potential next year. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - and our data does suggest that Berry Global Group's revenues are expected to grow faster than the wider market. 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.
With that in mind, we wouldn't be too quick to come to a conclusion on Berry Global Group. Long-term earnings power is much more important than next year's profits. We have forecasts for Berry Global Group going out to 2021, and you can see them free on our platform here.
It might also be worth considering whether Berry Global Group's debt load is appropriate, using our debt analysis tools on the Simply Wall St 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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