As you might know, Compass Minerals International, Inc. (NYSE:CMP) last week released its latest third-quarter, and things did not turn out so great for shareholders. It looks like quite a negative result overall, with both revenues and earnings falling well short of analyst predictions. Revenues of US$282m missed by 12%, and statutory earnings per share of US$0.07 fell short of forecasts by 86%. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Taking into account the latest results, the most recent consensus for Compass Minerals International from six analysts is for revenues of US$1.55b in 2021 which, if met, would be an okay 6.9% increase on its sales over the past 12 months. Per-share earnings are expected to surge 57% to US$3.80. Before this earnings report, the analysts had been forecasting revenues of US$1.56b and earnings per share (EPS) of US$3.88 in 2021. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a minor downgrade to their earnings per share forecasts.
It might be a surprise to learn that the consensus price target was broadly unchanged at US$64.50, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Compass Minerals International at US$81.00 per share, while the most bearish prices it at US$51.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
Of course, another way to look at these forecasts is to place them into context against the industry itself. Next year brings more of the same, according to the analysts, with revenue forecast to grow 6.9%, in line with its 7.6% annual growth over the past five years. Compare this with the wider industry, which analyst estimates (in aggregate) suggest will see revenues grow 7.0% next year. So although Compass Minerals International is expected to maintain its revenue growth rate, it's only growing at about the rate of 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 Compass Minerals International. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that in mind, we wouldn't be too quick to come to a conclusion on Compass Minerals International. Long-term earnings power is much more important than next year's profits. We have forecasts for Compass Minerals International going out to 2022, and you can see them free on our platform here.
You should always think about risks though. Case in point, we've spotted 2 warning signs for Compass Minerals International you should be aware of, and 1 of them is significant.
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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