Earnings Update: Here's Why Analysts Just Lifted Their Encore Wire Corporation (NASDAQ:WIRE) Price Target To US$287
Shareholders might have noticed that Encore Wire Corporation (NASDAQ:WIRE) filed its annual result this time last week. The early response was not positive, with shares down 7.0% to US$227 in the past week. Results were roughly in line with estimates, with revenues of US$2.6b and statutory earnings per share of US$21.62. 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 Encore Wire after the latest results.
See our latest analysis for Encore Wire
Following the recent earnings report, the consensus from three analysts covering Encore Wire is for revenues of US$2.48b in 2024. This implies a perceptible 3.3% decline in revenue compared to the last 12 months. Statutory earnings per share are forecast to crater 29% to US$16.83 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$2.52b and earnings per share (EPS) of US$17.01 in 2024. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
With the analysts reconfirming their revenue and earnings forecasts, it's surprising to see that the price target rose 20% to US$287. It looks as though they previously had some doubts over whether the business would live up to their expectations. 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 Encore Wire at US$302 per share, while the most bearish prices it at US$265. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.
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 revenue is expected to reverse, with a forecast 3.3% annualised decline to the end of 2024. That is a notable change from historical growth of 21% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 7.9% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Encore Wire is expected to lag the wider industry.
The Bottom Line
The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Encore Wire's revenue is expected to 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.
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. At Simply Wall St, we have a full range of analyst estimates for Encore Wire going out to 2025, and you can see them free on our platform here..
And what about risks? Every company has them, and we've spotted 2 warning signs for Encore Wire (of which 1 shouldn't be ignored!) you should know about.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
