Insteel Industries, Inc. Just Missed EPS By 48%: Here's What Analysts Think Will Happen Next
Insteel Industries, Inc. (NYSE:IIIN) missed earnings with its latest quarterly results, disappointing overly-optimistic forecasters. It wasn't a great result overall - while revenue fell marginally short of analyst estimates at US$122m, statutory earnings missed forecasts by an incredible 48%, coming in at just US$0.06 per share. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
See our latest analysis for Insteel Industries
Taking into account the latest results, the current consensus, from the twin analysts covering Insteel Industries, is for revenues of US$568.4m in 2024. This implies a discernible 5.9% reduction in Insteel Industries' revenue over the past 12 months. Statutory earnings per share are predicted to surge 77% to US$2.04. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$587.6m and earnings per share (EPS) of US$3.18 in 2024. The analysts seem less optimistic after the recent results, reducing their revenue forecasts and making a pretty serious reduction to earnings per share numbers.
What's most unexpected is that the consensus price target rose 5.6% to US$37.50, strongly implying the downgrade to forecasts is not expected to be more than a temporary blip.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 7.8% by the end of 2024. This indicates a significant reduction from annual growth of 12% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 4.9% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Insteel Industries is expected to lag the wider industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Insteel Industries. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. 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.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have analyst estimates for Insteel Industries going out as far as 2025, and you can see them free on our platform here.
And what about risks? Every company has them, and we've spotted 1 warning sign for Insteel Industries you should know about.
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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.
