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Earnings Miss: Worthington Industries, Inc. Missed EPS By 12% And Analysts Are Revising Their Forecasts

Simply Wall St

Investors in Worthington Industries, Inc. (NYSE:WOR) had a good week, as its shares rose 7.5% to close at US$44.02 following the release of its second-quarter results. It was not a great result overall. Although revenues beat expectations, hitting US$828m, statutory earnings missed analyst forecasts by 12%, coming in at just US$2.61 per share. This is an important time for investors, as they can track a company's performance in its report, look at what top analysts are forecasting for next year, and see if there has been any change to expectations for the business. We thought readers would find it interesting to see analysts' latest (statutory) post-earnings forecasts for next year.

Check out our latest analysis for Worthington Industries

NYSE:WOR Past and Future Earnings, December 20th 2019
NYSE:WOR Past and Future Earnings, December 20th 2019

Following the recent earnings report, the consensus fromfour analysts covering Worthington Industries expects revenues of US$3.34b in 2020, implying a measurable 4.6% decline in sales compared to the last 12 months. Statutory earnings per share are expected to soar 33% to US$2.67. In the lead-up to this report, analysts had been modelling revenues of US$3.33b and earnings per share (EPS) of US$1.96 in 2020. Although the revenue estimates have not really changed, we can see there's been a considerable lift to earnings per share expectations, suggesting that analysts have become more bullish after the latest result.

Analysts have been lifting their price targets on the back of the earnings upgrade, with the consensus price target rising 12% to US$40.67. The consensus price target just an average of individual analyst targets, so - considering that the price target changed, it would be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Worthington Industries at US$43.00 per share, while the most bearish prices it at US$38.00. Still, with such a tight range of estimates, it suggests analysts have a pretty good idea of what they think the company is worth.

Further, we can compare these estimates to past performance, and see how Worthington Industries forecasts compare to the wider market's forecast performance. We would highlight that sales are expected to reverse, with the forecast 4.6% revenue decline a notable change from historical growth of 3.7% over the last five years. Compare this with our data, which suggests that other companies in the same market are, in aggregate, expected to see their revenue grow 4.5% next year. It's pretty clear that Worthington Industries's revenues are expected to perform substantially worse than the wider market.

The Bottom Line

The most important thing to take away from this is that analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Worthington Industries following these results. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Worthington Industries's revenues are expected to perform worse than the wider market. There was also a nice increase in the price target, with analysts feeling that the intrinsic value of the business is improving.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Worthington Industries going out to 2024, and you can see them free on our platform here..

You can also view our analysis of Worthington Industries's balance sheet, and whether we think Worthington Industries is carrying too much debt, for free on our platform here.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.