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Shareholders will be ecstatic, with their stake up 42% over the past week following The Greenbrier Companies, Inc.'s (NYSE:GBX) latest quarterly results. It was a curious result overall, with revenues coming in an incredible 20% below what the analysts had expected, at US$624m. Statutory earnings per share beat analyst models by 71% to hit US$0.41. The 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the five analysts covering Greenbrier Companies provided consensus estimates of US$2.66b revenue in 2020, which would reflect an uneasy 16% decline on its sales over the past 12 months. Statutory earnings per share are expected to crater 62% to US$0.84 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$3.47b and earnings per share (EPS) of US$2.40 in 2020. It looks like sentiment has declined substantially in the aftermath of these results, with a large cut to revenue estimates and a large cut to earnings per share numbers as well.
It'll come as no surprise then, to learn thatthe analysts have cut their price target 21% to US$25.17. 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. There are some variant perceptions on Greenbrier Companies, with the most bullish analyst valuing it at US$38.00 and the most bearish at US$17.00 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. These estimates imply that sales are expected to slow, with a forecast revenue decline of 16%, a significant reduction from annual growth of 2.7% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 0.6% next year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Greenbrier Companies is expected to lag the wider industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Greenbrier Companies. Unfortunately, they also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
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 estimates - from multiple Greenbrier Companies analysts - going out to 2021, and you can see them free on our platform here.
However, before you get too enthused, we've discovered 5 warning signs for Greenbrier Companies (2 can't be ignored!) that you should be aware of.
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