Investors in Compass Minerals International, Inc. (NYSE:CMP) had a good week, as its shares rose 8.2% to close at US$64.28 following the release of its yearly results. It was not a great result overall. While revenues of US$1.5b were in line with analyst predictions, earnings were less than expected, missing statutory estimates by 11% to hit US$1.81 per share. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether analysts have changed their mind on Compass Minerals International after the latest results.
Following the latest results, Compass Minerals International's seven analysts are now forecasting revenues of US$1.58b in 2020. This would be an okay 6.3% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to surge 84% to US$3.39. Yet prior to the latest earnings, analysts had been forecasting revenues of US$1.62b and earnings per share (EPS) of US$3.59 in 2020. Analysts are less bullish than they were before these results, given the reduced revenue forecasts and the minor downgrade to earnings per share expectations.
The average price target climbed 5.6% to US$67.50 despite the reduced earnings forecasts, suggesting that this earnings impact could be a positive for the stock, once it passes. 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. Currently, the most bullish analyst values Compass Minerals International at US$81.00 per share, while the most bearish prices it at US$51.00. This shows there is still quite a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
It can also be useful to step back and take a broader view of how analyst forecasts compare to Compass Minerals International's performance in recent years. Next year brings more of the same, according to analysts, with revenue forecast to grow 6.3%, in line with its 6.1% annual growth over the past five years. Compare this with the wider market, which analyst estimates (in aggregate) suggest will see revenues grow 4.1% next year. So although Compass Minerals International is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider market.
The Bottom Line
The biggest concern with the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Compass Minerals International. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider market. There was also a nice increase in the price target, with analysts feeling that the intrinsic value of the business is improving.
Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Compass Minerals International analysts - going out to 2022, and you can see them free on our platform here.
You can also view our analysis of Compass Minerals International's balance sheet, and whether we think Compass Minerals International is carrying too much debt, for free on our platform here.
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