Earnings Miss: Element Solutions Inc Missed EPS By 13% And Analysts Are Revising Their Forecasts
Element Solutions Inc (NYSE:ESI) last week reported its latest annual results, which makes it a good time for investors to dive in and see if the business is performing in line with expectations. Revenues were in line with forecasts, at US$2.3b, although statutory earnings per share came in 13% below what the analysts expected, at US$0.49 per share. 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.
Check out our latest analysis for Element Solutions
Taking into account the latest results, the consensus forecast from Element Solutions' eight analysts is for revenues of US$2.45b in 2024. This reflects a modest 4.9% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to bounce 56% to US$0.75. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$2.49b and earnings per share (EPS) of US$0.87 in 2024. So there's definitely been a decline in sentiment after the latest results, noting the real cut to new EPS forecasts.
The consensus price target held steady at US$26.44, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Element Solutions, with the most bullish analyst valuing it at US$30.00 and the most bearish at US$22.00 per share. 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.
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. We would highlight that Element Solutions' revenue growth is expected to slow, with the forecast 4.9% annualised growth rate until the end of 2024 being well below the historical 7.4% p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 4.4% annually. So it's pretty clear that, while Element Solutions' revenue growth is expected to slow, it's expected to grow roughly in line with the industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Element Solutions. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. The consensus price target held steady at US$26.44, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn't be too quick to come to a conclusion on Element Solutions. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Element Solutions going out to 2026, and you can see them free on our platform here..
Plus, you should also learn about the 3 warning signs we've spotted with Element Solutions (including 1 which is concerning) .
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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.
