It's been a good week for The Chemours Company (NYSE:CC) shareholders, because the company has just released its latest quarterly results, and the shares gained 6.2% to US$11.61. Revenues of US$1.3b fell slightly short of expectations, but earnings were a definite bright spot, with statutory per-share profits of US$0.61 an impressive 39% ahead of estimates. Earnings are an important time for investors, as they can track a company's performance, look at what the 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 statutory forecasts to see whether the analysts have changed their mind on Chemours after the latest results.
Taking into account the latest results, the ten analysts covering Chemours provided consensus estimates of US$4.83b revenue in 2020, which would reflect a not inconsiderable 11% decline on its sales over the past 12 months. Chemours is also expected to turn profitable, with statutory earnings of US$1.70 per share. In the lead-up to this report, the analysts had been modelling revenues of US$5.37b and earnings per share (EPS) of US$2.17 in 2020. It looks like sentiment has declined substantially in the aftermath of these results, with a substantial drop in revenue estimates and a pretty serious reduction to earnings per share numbers as well.
The average price target climbed 8.7% to US$13.58 despite the reduced earnings forecasts, suggesting that this earnings impact could be a positive for the stock, once it passes. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Chemours analyst has a price target of US$19.00 per share, while the most pessimistic values it at US$8.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Chemours' past performance and to peers in the same industry. We would highlight that sales are expected to reverse, with the forecast 11% revenue decline a notable change from historical growth of 0.6% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 4.0% next year. It's pretty clear that Chemours' revenues are expected to perform substantially worse than 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. Unfortunately, they also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
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. At Simply Wall St, we have a full range of analyst estimates for Chemours going out to 2023, and you can see them free on our platform here..
You still need to take note of risks, for example - Chemours has 3 warning signs (and 1 which makes us a bit uncomfortable) we think you should know about.
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