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There's been a notable change in appetite for Cornerstone Building Brands, Inc. (NYSE:CNR) shares in the week since its first-quarter report, with the stock down 16% to US$3.97. It was a pretty bad result overall; while revenues were in line with expectations at US$1.1b, statutory losses exploded to US$4.30 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
After the latest results, the consensus from Cornerstone Building Brands' dual analysts is for revenues of US$4.05b in 2020, which would reflect an uncomfortable 18% decline in sales compared to the last year of performance. In the lead-up to this report, the analysts had been modelling revenues of US$4.59b and break-even in 2020. So there's been a clear change in sentiment after these results, with the analysts making a substantial drop in revenues and reconfirming their earnings per share estimates.
The average price target fell 30% to US$6.17, withthe analysts clearly having become less optimistic about Cornerstone Building Brands'prospects following its latest earnings.
Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that sales are expected to slow, with a forecast revenue decline of 18%, a significant reduction from annual growth of 28% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 3.9% next year. It's pretty clear that Cornerstone Building Brands' revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Unfortunately, they also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
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 analyst estimates for Cornerstone Building Brands going out as far as 2021, and you can see them free on our platform here.
You should always think about risks though. Case in point, we've spotted 1 warning sign for Cornerstone Building Brands you should be aware of.
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