Some GrafTech International Ltd. (NYSE:EAF) Analysts Just Made A Major Cut To Next Year's Estimates
One thing we could say about the analysts on GrafTech International Ltd. (NYSE:EAF) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon.
Following the downgrade, the consensus from four analysts covering GrafTech International is for revenues of US$863m in 2023, implying a disturbing 38% decline in sales compared to the last 12 months. Statutory earnings per share are anticipated to plunge 66% to US$0.63 in the same period. Before this latest update, the analysts had been forecasting revenues of US$1.3b and earnings per share (EPS) of US$0.87 in 2023. It looks like analyst sentiment has declined substantially, with a pretty serious reduction to revenue estimates and a pretty serious decline to earnings per share numbers as well.
See our latest analysis for GrafTech International
The consensus price target fell 19% to US$6.00, with the weaker earnings outlook clearly leading analyst valuation estimates. 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 GrafTech International, with the most bullish analyst valuing it at US$10.00 and the most bearish at US$4.00 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
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 annualised revenue decline of 32% by the end of 2023. This indicates a significant reduction from annual growth of 4.1% 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 9.9% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - GrafTech International is expected to lag the wider industry.
The Bottom Line
The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for GrafTech International. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that GrafTech International's revenues are expected to grow slower than the wider market. Given the scope of the downgrades, it would not be a surprise to see the market become more wary of the business.
There might be good reason for analyst bearishness towards GrafTech International, like a weak balance sheet. For more information, you can click here to discover this and the 1 other warning sign we've identified.
We also provide an overview of the GrafTech International Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.
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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.
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