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A week ago, Constellium SE (NYSE:CSTM) came out with a strong set of quarterly numbers that could potentially lead to a re-rate of the stock. The company beat both earnings and revenue forecasts, with revenue of €1.5b, some 4.7% above estimates, and statutory earnings per share (EPS) coming in at €0.73, 305% ahead of expectations. 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 Constellium after the latest results.
Following the latest results, Constellium's seven analysts are now forecasting revenues of €5.61b in 2021. This would be a credible 6.3% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to shrink 9.6% to €1.27 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of €5.46b and earnings per share (EPS) of €0.75 in 2021. There's been a pretty noticeable increase in sentiment, with the analysts upgrading revenues and making a sizeable expansion in earnings per share in particular.
With these upgrades, we're not surprised to see that the analysts have lifted their price target 10% to US$23.38per share. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Constellium at US$26.00 per share, while the most bearish prices it at US$20.21. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Constellium is an easy business to forecast or the the analysts are all using similar assumptions.
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. The analysts are definitely expecting Constellium's growth to accelerate, with the forecast 13% annualised growth to the end of 2021 ranking favourably alongside historical growth of 1.8% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 0.08% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Constellium to grow faster than the wider industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Constellium following these results. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
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. We have forecasts for Constellium going out to 2023, and you can see them free on our platform here.
You still need to take note of risks, for example - Constellium has 3 warning signs (and 1 which is significant) we think you should know about.
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.
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