Casella Waste Systems, Inc. (NASDAQ:CWST) shares fell 2.1% to US$53.54 in the week since its latest full-year results. Revenues of US$743m were in line with forecasts, although statutory earnings per share (EPS) came in below expectations at US$0.66, missing estimates by 4.1%. 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. We thought readers would find it interesting to see analysts' latest (statutory) post-earnings forecasts for next year.
Following the latest results, Casella Waste Systems's four analysts are now forecasting revenues of US$813.9m in 2020. This would be a meaningful 9.5% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to step up 19% to US$0.80. Before this earnings report, analysts had been forecasting revenues of US$816.0m and earnings per share (EPS) of US$1.04 in 2020. So there's definitely been a decline in analyst sentiment after the latest results, noting the pretty serious reduction to new EPS forecasts.
Although analysts have revised their earnings forecasts for next year, they've also lifted the consensus price target 9.5% to US$57.50, suggesting the revised estimates are not indicative of a weaker long-term future for the business. The consensus price target just an average of individual analyst targets, so - considering that the price target changed, it would be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Casella Waste Systems, with the most bullish analyst valuing it at US$60.00 and the most bearish at US$45.00 per share. Still, with such a tight range of estimates, it suggests analysts have a pretty good idea of what they think the company is worth.
It can also be useful to step back and take a broader view of how analyst forecasts compare to Casella Waste Systems's performance in recent years. Analysts are definitely expecting Casella Waste Systems's growth to accelerate, with the forecast 9.5% growth ranking favourably alongside historical growth of 5.9% 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 5.2% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Casella Waste Systems is expected to grow much faster than its 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. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - and our data does suggest that Casella Waste Systems's revenues are expected to grow faster than the wider market. Analysts also upgraded their price target, suggesting that analysts believe the intrinsic value of the business is likely to improve over time.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have forecasts for Casella Waste Systems going out to 2024, and you can see them free on our platform here.
You can also see whether Casella Waste Systems is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.