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Eagle Materials Inc. Just Recorded A 13% EPS Beat: Here's What Analysts Are Forecasting Next

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Simply Wall St
·3 min read
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As you might know, Eagle Materials Inc. (NYSE:EXP) just kicked off its latest third-quarter results with some very strong numbers. Eagle Materials beat earnings, with revenues hitting US$405m, ahead of expectations, and statutory earnings per share outperforming analyst reckonings by a solid 13%. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

Check out our latest analysis for Eagle Materials

earnings-and-revenue-growth
earnings-and-revenue-growth

Following last week's earnings report, Eagle Materials' ten analysts are forecasting 2022 revenues to be US$1.65b, approximately in line with the last 12 months. Statutory earnings per share are predicted to soar 65% to US$7.07. In the lead-up to this report, the analysts had been modelling revenues of US$1.66b and earnings per share (EPS) of US$6.86 in 2022. So the consensus seems to have become somewhat more optimistic on Eagle Materials' earnings potential following these results.

The analysts have been lifting their price targets on the back of the earnings upgrade, with the consensus price target rising 18% to US$129. 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. Currently, the most bullish analyst values Eagle Materials at US$139 per share, while the most bearish prices it at US$95.00. This shows there is still 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.

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 Eagle Materials' revenue growth will slow down substantially, with revenues next year expected to grow 1.1%, compared to a historical growth rate of 6.4% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 5.0% next 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 Eagle Materials.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Eagle Materials' earnings potential next year. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse 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.

With that in mind, we wouldn't be too quick to come to a conclusion on Eagle Materials. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Eagle Materials analysts - going out to 2025, and you can see them free on our platform here.

You still need to take note of risks, for example - Eagle Materials has 3 warning signs we think you should be aware of.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.