Northwest Pipe Company Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Predictions
Last week saw the newest quarterly earnings release from Northwest Pipe Company (NASDAQ:NWPX), an important milestone in the company's journey to build a stronger business. The result was positive overall - although revenues of US$78m were in line with what the analysts predicted, Northwest Pipe surprised by delivering a statutory profit of US$0.73 per share, modestly greater than expected. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Northwest Pipe after the latest results.
Check out our latest analysis for Northwest Pipe
Following last week's earnings report, Northwest Pipe's twin analysts are forecasting 2021 revenues to be US$292.5m, approximately in line with the last 12 months. Statutory earnings per share are expected to descend 19% to US$2.15 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$296.0m and earnings per share (EPS) of US$2.21 in 2021. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a minor downgrade to their earnings per share forecasts.
It might be a surprise to learn that the consensus price target was broadly unchanged at US$34.00, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation.
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. We would highlight that Northwest Pipe's revenue growth is expected to slow, with forecast 1.3% increase next year well below the historical 11%p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 5.0% per year. Factoring in the forecast slowdown in growth, it seems obvious that Northwest Pipe is also expected to grow slower than other industry participants.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. The consensus price target held steady at US$34.00, with the latest estimates not enough to have an impact on their price targets.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have analyst estimates for Northwest Pipe going out as far as 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.
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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