Cooper-Standard Holdings Inc. Earnings Missed Analyst Estimates: Here's What Analysts Are Forecasting Now
It's been a mediocre week for Cooper-Standard Holdings Inc. (NYSE:CPS) shareholders, with the stock dropping 18% to US$17.85 in the week since its latest annual results. Statutory earnings per share fell badly short of expectations, coming in at US$3.92, some 39% below analyst forecasts, although revenues were okay, approximately in line with analyst estimates at US$3.1b. 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.
See our latest analysis for Cooper-Standard Holdings
After the latest results, the consensus from Cooper-Standard Holdings's three analysts is for revenues of US$2.99b in 2020, which would reflect a perceptible 3.7% decline in sales compared to the last year of performance. The company is expected to report a statutory loss of US$0.74 in 2020, a sharp decline from a profit over the last year. In the lead-up to this report, analysts had been modelling revenues of US$3.01b and earnings per share (EPS) of US$2.24 in 2020. While analysts have made no real change to their revenue estimates, we can see that the consensus is now modelling a loss next year - a clear dip in sentiment compared to previous forecasts for a profit.
With the increase in forecast losses for next year, it's perhaps no surprise to see that the average analyst price target dipped 28% to US$27.00, with analysts signalling that growing losses would be a definite concern. 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. The most optimistic Cooper-Standard Holdings analyst has a price target of US$32.00 per share, while the most pessimistic values it at US$24.00. Still, with such a tight range of estimates, it suggests analysts have a pretty good idea of what they think the company is worth.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that sales are expected to reverse, with the forecast 3.7% revenue decline a notable change from historical growth of 1.2% over the last five years. Compare this with our data, which suggests that other companies in the same market are, in aggregate, expected to see their revenue grow 4.5% next year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - analysts also expect Cooper-Standard Holdings to grow slower than the wider market.
The Bottom Line
The biggest low-light for us was that the forecasts for Cooper-Standard Holdings dropped from profits to a loss next year. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Cooper-Standard Holdings's revenues are expected to perform worse than the wider market. Analysts also downgraded their price target, suggesting that the latest news has led analysts to become more pessimistic about the intrinsic value of the business.
With that in mind, we wouldn't be too quick to come to a conclusion on Cooper-Standard Holdings. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Cooper-Standard Holdings analysts - going out to 2021, and you can see them free on our platform here.
It might also be worth considering whether Cooper-Standard Holdings's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
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.
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