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Orion Engineered Carbons S.A. (NYSE:OEC) shareholders are probably feeling a little disappointed, since its shares fell 9.2% to US$13.66 in the week after its latest third-quarter results. Revenues of US$282m fell slightly short of expectations, but earnings were a definite bright spot, with statutory per-share profits of US$0.15 an impressive 36% ahead of estimates. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Taking into account the latest results, the most recent consensus for Orion Engineered Carbons from five analysts is for revenues of US$1.25b in 2021 which, if met, would be a meaningful 9.2% increase on its sales over the past 12 months. Statutory earnings per share are predicted to leap 124% to US$1.05. In the lead-up to this report, the analysts had been modelling revenues of US$1.27b and earnings per share (EPS) of US$0.95 in 2021. So the consensus seems to have become somewhat more optimistic on Orion Engineered Carbons' earnings potential following these results.
The consensus price target rose 5.7% to US$16.00, suggesting that higher earnings estimates flow through to the stock's valuation as well. 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 Orion Engineered Carbons, with the most bullish analyst valuing it at US$20.00 and the most bearish at US$10.00 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.
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 Orion Engineered Carbons' rate of growth is expected to accelerate meaningfully, with the forecast 9.2% revenue growth noticeably faster than its historical growth of 4.0%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 5.6% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Orion Engineered Carbons 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 Orion Engineered Carbons following these results. Happily, there were no major changes to revenue forecasts, with the business still expected 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.
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 estimates - from multiple Orion Engineered Carbons analysts - going out to 2024, and you can see them free on our platform here.
And what about risks? Every company has them, and we've spotted 2 warning signs for Orion Engineered Carbons you should know about.
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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