Earnings Release: Here's Why Analysts Cut Their FreightCar America, Inc. (NASDAQ:RAIL) Price Target To US$4.00
FreightCar America, Inc. (NASDAQ:RAIL) missed earnings with its latest full-year results, disappointing overly-optimistic forecasters. Revenues missed expectations somewhat, coming in at US$358m, but statutory earnings fell catastrophically short, with a loss of US$1.18 some 20% larger than what the analysts had predicted. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Check out our latest analysis for FreightCar America
Following the latest results, FreightCar America's twin analysts are now forecasting revenues of US$499.0m in 2024. This would be a substantial 39% improvement in revenue compared to the last 12 months. Earnings are expected to improve, with FreightCar America forecast to report a statutory profit of US$0.10 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$482.3m and earnings per share (EPS) of US$0.20 in 2024. While next year's revenue estimates increased, there was also a pretty serious reduction to EPS expectations, suggesting the consensus has a bit of a mixed view of these results.
The analysts also cut FreightCar America's price target 5.9% to US$4.00, implying that lower forecast earnings are expected to have a more negative impact than can be offset by the increase in revenue.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the FreightCar America's past performance and to peers in the same industry. It's clear from the latest estimates that FreightCar America's rate of growth is expected to accelerate meaningfully, with the forecast 39% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 10% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 3.4% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that FreightCar America is expected to grow much faster than its industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Happily, they also upgraded their revenue estimates, and are forecasting them to grow faster than the wider industry. 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.
With that in mind, we wouldn't be too quick to come to a conclusion on FreightCar America. Long-term earnings power is much more important than next year's profits. At least one analyst has provided forecasts out to 2025, which can be seen for free on our platform here.
It is also worth noting that we have found 2 warning signs for FreightCar America that you need to take into consideration.
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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.
