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Compass Minerals International, Inc. Just Beat EPS By 63%: Here's What Analysts Think Will Happen Next

Simply Wall St
·4 min read

Shareholders might have noticed that Compass Minerals International, Inc. (NYSE:CMP) filed its quarterly result this time last week. The early response was not positive, with shares down 6.4% to US$46.00 in the past week. It looks to have been a decent result overall - while revenue fell marginally short of analyst estimates at US$414m, statutory earnings beat expectations by a notable 63%, coming in at US$0.80 per share. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

See our latest analysis for Compass Minerals International

NYSE:CMP Past and Future Earnings May 7th 2020
NYSE:CMP Past and Future Earnings May 7th 2020

Taking into account the latest results, the consensus forecast from Compass Minerals International's nine analysts is for revenues of US$1.54b in 2020, which would reflect a satisfactory 2.3% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to increase 4.1% to US$2.50. In the lead-up to this report, the analysts had been modelling revenues of US$1.55b and earnings per share (EPS) of US$3.02 in 2020. The analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a real cut to EPS estimates.

It might be a surprise to learn that the consensus price target was broadly unchanged at US$59.60, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on 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. The most optimistic Compass Minerals International analyst has a price target of US$81.00 per share, while the most pessimistic values it at US$39.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's pretty clear that there is an expectation that Compass Minerals International's revenue growth will slow down substantially, with revenues next year expected to grow 2.3%, compared to a historical growth rate of 6.8% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 6.8% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Compass Minerals International.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Compass Minerals International. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. The consensus price target held steady at US$59.60, with the latest estimates not enough to have an impact on their price targets.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Compass Minerals International going out to 2022, and you can see them free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 2 warning signs for Compass Minerals International (1 is significant) you should be aware of.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.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.

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.