Shareholders might have noticed that Entegris, Inc. (NASDAQ:ENTG) filed its first-quarter result this time last week. The early response was not positive, with shares down 4.8% to US$50.46 in the past week. Revenues were US$412m, approximately in line with expectations, although statutory earnings per share (EPS) performed substantially better. EPS of US$0.45 were also better than expected, beating analyst predictions by 14%. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Taking into account the latest results, Entegris' eight analysts currently expect revenues in 2020 to be US$1.63b, approximately in line with the last 12 months. Statutory earnings per share are forecast to plummet 24% to US$1.60 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$1.69b and earnings per share (EPS) of US$1.80 in 2020. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a real cut to earnings per share estimates.
Despite the cuts to forecast earnings, there was no real change to the US$57.22 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Entegris, with the most bullish analyst valuing it at US$63.00 and the most bearish at US$48.00 per share. This is a very narrow spread of estimates, implying either that Entegris is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
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 Entegris' revenue growth is expected to slow, with forecast 1.3% increase next year well below the historical 9.9%p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 8.6% next year. Factoring in the forecast slowdown in growth, it seems obvious that Entegris is also expected to grow slower than other industry participants.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Entegris. 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. The consensus price target held steady at US$57.22, with the latest estimates not enough to have an impact on their price targets.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Entegris going out to 2022, and you can see them free on our platform here..
It is also worth noting that we have found 2 warning signs for Entegris that you need to take into consideration.
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