Ball Corporation (NYSE:BLL) investors will be delighted, with the company turning in some strong numbers with its latest results. The company beat expectations with revenues of US$3.1b arriving 2.7% ahead of forecasts. Statutory earnings per share (EPS) were US$0.72, 2.6% ahead of estimates. 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.
After the latest results, the 14 analysts covering Ball are now predicting revenues of US$12.5b in 2021. If met, this would reflect a solid 9.4% improvement in sales compared to the last 12 months. Per-share earnings are expected to shoot up 73% to US$2.76. In the lead-up to this report, the analysts had been modelling revenues of US$12.2b and earnings per share (EPS) of US$2.81 in 2021. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
With the analysts reconfirming their revenue and earnings forecasts, it's surprising to see that the price target rose 8.2% to US$95.73. It looks as though they previously had some doubts over whether the business would live up to their expectations. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Ball at US$120 per share, while the most bearish prices it at US$47.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Ball's past performance and to peers in the same industry. Next year brings more of the same, according to the analysts, with revenue forecast to grow 9.4%, in line with its 8.1% annual growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 4.5% per year. So although Ball is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
With that in mind, we wouldn't be too quick to come to a conclusion on Ball. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Ball analysts - going out to 2024, and you can see them free on our platform here.
Don't forget that there may still be risks. For instance, we've identified 3 warning signs for Ball (1 is a bit unpleasant) 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.
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