Insteel Industries, Inc. (NASDAQ:IIIN) just released its latest first-quarter results and things are looking bullish. Insteel Industries delivered a significant beat to revenue and earnings per share (EPS) expectations, with sales hitting US$120m, some 16% above indicated. Statutory EPS were US$0.42, an impressive 42% ahead of forecasts. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Following the latest results, Insteel Industries' dual analysts are now forecasting revenues of US$529.9m in 2021. This would be an okay 7.1% improvement in sales compared to the last 12 months. Per-share earnings are expected to jump 42% to US$1.96. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$464.1m and earnings per share (EPS) of US$1.38 in 2021. So we can see there's been a pretty clear increase in sentiment following the latest results, with both revenues and earnings per share receiving a decent lift in the latest estimates.
With these upgrades, we're not surprised to see that the analysts have lifted their price target 28% to US$30.00per share.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's clear from the latest estimates that Insteel Industries' rate of growth is expected to accelerate meaningfully, with the forecast 7.1% revenue growth noticeably faster than its historical growth of 2.9%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 5.5% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Insteel Industries to grow faster than the wider industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Insteel Industries following these results. Happily, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
With that in mind, we wouldn't be too quick to come to a conclusion on Insteel Industries. Long-term earnings power is much more important than next year's profits. At least one analyst has provided forecasts out to 2022, which can be seen for free on our platform here.
We also provide an overview of the Insteel Industries Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.
This article by Simply Wall St is general in nature. 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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