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Casella Waste Systems, Inc. Beat Analyst Estimates: See What The Consensus Is Forecasting For Next Year

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Simply Wall St
·4 min read
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Shareholders might have noticed that Casella Waste Systems, Inc. (NASDAQ:CWST) filed its quarterly result this time last week. The early response was not positive, with shares down 6.7% to US$53.99 in the past week. It looks like a credible result overall - although revenues of US$203m were in line with what the analysts predicted, Casella Waste Systems surprised by delivering a statutory profit of US$0.31 per share, a notable 13% above expectations. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

Check out our latest analysis for Casella Waste Systems

earnings-and-revenue-growth
earnings-and-revenue-growth

Taking into account the latest results, the consensus forecast from Casella Waste Systems' six analysts is for revenues of US$827.8m in 2021, which would reflect a reasonable 7.8% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to soar 36% to US$0.98. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$827.8m and earnings per share (EPS) of US$0.88 in 2021. There was no real change to the revenue estimates, but the analysts do seem more bullish on earnings, given the substantial gain in earnings per share expectations following these results.

There's been no major changes to the consensus price target of US$66.80, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. 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. There are some variant perceptions on Casella Waste Systems, with the most bullish analyst valuing it at US$73.00 and the most bearish at US$60.00 per share. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Casella Waste Systems' past performance and to peers in the same industry. We can infer from the latest estimates that forecasts expect a continuation of Casella Waste Systems'historical trends, as next year's 7.8% revenue growth is roughly in line with 7.6% annual revenue growth over the past five years. Compare this with the wider industry, which analyst estimates (in aggregate) suggest will see revenues grow 6.1% next year. So although Casella Waste Systems is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Casella Waste Systems' earnings potential next year. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. 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 Casella Waste Systems. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Casella Waste Systems going out to 2024, and you can see them free on our platform here..

However, before you get too enthused, we've discovered 3 warning signs for Casella Waste Systems (1 is a bit unpleasant!) that you should be aware of.

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 editorial-team@simplywallst.com.