A week ago, Charah Solutions, Inc. (NYSE:CHRA) came out with a strong set of quarterly numbers that could potentially lead to a re-rate of the stock. The results overall were pretty good, with revenues of US$121m exceeding expectations and losses coming in at justUS$0.11 per share, some 100% below what analysts had forecast. Following the result, 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. We've gathered the most recent forecasts to see whether analysts have changed their earnings models, following these results.
Taking into account the latest results, the current consensus, from the dual analysts covering Charah Solutions, is for revenues of US$588.4m in 2020, which would reflect a discernible 3.3% reduction in Charah Solutions's sales over the past 12 months. Charah Solutions is also expected to turn profitable, with earnings of US$0.13 per share. Yet prior to the latest earnings, analysts had been forecasting revenues of US$577.5m and earnings per share (EPS) of US$0.76 in 2020. Analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a large cut to EPS estimates.
The average analyst price target fell 21% to US$4.33, with reduced earnings forecasts clearly tied to a lower valuation estimate.
It can be useful to take a broader overview by seeing how analyst forecasts compare, both to the Charah Solutions's past performance and to peers in the same market. These estimates imply that sales are expected to slow, with a forecast revenue decline of 3.3% a significant reduction from annual growth of 27% over the last three years. By contrast, our data suggests that other companies (with analyst coverage) in the same market are forecast to see their revenue grow 5.8% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - analysts also expect Charah Solutions to grow slower than the wider market.
The Bottom Line
The biggest highlight of the new consensus is that analysts have reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Charah Solutions. On the plus side, there were no major changes to revenue estimates; although analyst forecasts imply revenues will perform worse than the wider market. Analysts also downgraded their price target, suggesting that the latest news has led analysts to become more pessimistic about the intrinsic value of the business.
Still, the long-term prospects of the business are much more relevant than next year's earnings. We have analyst estimates for Charah Solutions going out as far as 2023, and you can see them free on our platform here.
You can also view our analysis of Charah Solutions's balance sheet, and whether we think Charah Solutions is carrying too much debt, for free on our platform here.
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