Earnings Miss: Core & Main, Inc. Missed EPS By 30% And Analysts Are Revising Their Forecasts
It's been a good week for Core & Main, Inc. (NYSE:CNM) shareholders, because the company has just released its latest annual results, and the shares gained 4.7% to US$24.96. It looks like a pretty bad result, all things considered. Although revenues of US$5.0b were in line with analyst predictions, statutory earnings fell badly short, missing estimates by 30% to hit US$0.55 per share. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Check out our latest analysis for Core & Main
Taking into account the latest results, the current consensus from Core & Main's ten analysts is for revenues of US$5.54b in 2023, which would reflect a notable 11% increase on its sales over the past 12 months. Statutory earnings per share are predicted to leap 271% to US$1.36. In the lead-up to this report, the analysts had been modelling revenues of US$5.06b and earnings per share (EPS) of US$1.22 in 2023. So it seems there's been a definite increase in optimism about Core & Main's future following the latest results, with a substantial gain in the earnings per share forecasts in particular.
Despite these upgrades,the analysts have not made any major changes to their price target of US$31.42, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. 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 Core & Main at US$43.00 per share, while the most bearish prices it at US$25.00. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
Of course, another way to look at these forecasts is to place them into context against the industry itself. It's pretty clear that there is an expectation that Core & Main's revenue growth will slow down substantially, with revenues to the end of 2023 expected to display 11% growth on an annualised basis. This is compared to a historical growth rate of 14% over the past three years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 7.4% annually. So it's pretty clear that, while Core & Main's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Core & Main's earnings potential next year. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than 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.
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. We have estimates - from multiple Core & Main analysts - going out to 2025, and you can see them free on our platform here.
Plus, you should also learn about the 2 warning signs we've spotted with Core & Main (including 1 which makes us a bit uncomfortable) .
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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.
