Haynes International, Inc. (NASDAQ:HAYN) shares fell 2.7% to US$26.81 in the week since its latest first-quarter results. Revenues were US$108m, 12% below analyst expectations, although losses didn't appear to worsen significantly, with a statutory per-share loss of US$0.26 being in line with what analysts forecast. 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. So we gathered the latest post-earnings forecasts to see what analysts' statutory forecasts suggest is in store for next year.
Taking into account the latest results, the most recent consensus for Haynes International from four analysts is for revenues of US$505.0m in 2020, which is a reasonable 2.7% increase on its sales over the past 12 months. Statutory earnings per share are expected to leap 59% to US$1.86. Yet prior to the latest earnings, analysts had been forecasting revenues of US$532.6m and earnings per share (EPS) of US$1.74 in 2020. So it's pretty clear that while sentiment around revenues has declined following the latest results, analysts are now more bullish on the company's earnings power.
The consensus price target fell 6.8% to US$41.33, with analysts signalling that the weaker revenue outlook was a more powerful indicator than the upgraded EPS forecasts. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Haynes International, with the most bullish analyst valuing it at US$51.00 and the most bearish at US$31.00 per share. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
Zooming out to look at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up both against past performance, and against industry growth estimates. For example, we noticed that Haynes International's rate of growth is expected to accelerate meaningfully, with revenues forecast to grow at 2.7%, well above its historical decline of 0.3% a year over the past five years. Compare this against analyst estimates for the wider market, which suggest that (in aggregate) market revenues are expected to grow 4.6% next year. Although Haynes International's revenues are expected to improve, it seems that analysts are still bearish on the business, forecasting it to grow slower than the wider market.
The Bottom Line
The biggest takeaway for us from these new estimates is that the consensus upgraded its earnings per share estimates, showing a clear improvement in sentiment around Haynes International's earnings potential next year. Unfortunately, analysts also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider market. Even so, earnings per share are more important to the intrinsic value of the business. Still, earnings are more important to the intrinsic value of the business. 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 forecasts for Haynes International going out to 2022, and you can see them free on our platform here.
Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.
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