It's been a pretty great week for Patrick Industries, Inc. (NASDAQ:PATK) shareholders, with its shares surging 14% to US$61.41 in the week since its latest annual results. Patrick Industries reported US$2.3b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$3.85 beat expectations, being 3.1% higher than what analysts expected. Following the result, 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 analysts' statutory forecasts suggest is in store for next year.
Taking into account the latest results, the most recent consensus for Patrick Industries from six analysts is for revenues of US$2.45b in 2020, which is an okay 4.8% increase on its sales over the past 12 months. Statutory earnings per share are expected to grow 13% to US$4.40. Yet prior to the latest earnings, analysts had been forecasting revenues of US$2.41b and earnings per share (EPS) of US$4.43 in 2020. So it's pretty clear that, although analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
With analysts reconfirming their revenue and earnings forecasts, it's surprising to see that the price target rose 16% to US$65.86. It looks as though analysts previously had some doubts over whether the business would live up to their expectations. 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. The most optimistic Patrick Industries analyst has a price target of US$75.00 per share, while the most pessimistic values it at US$43.00. 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.
Further, we can compare these estimates to past performance, and see how Patrick Industries forecasts compare to the wider market's forecast performance. It's pretty clear that analysts expect Patrick Industries's revenue growth will slow down substantially, with revenues next year expected to grow 4.8%, compared to a historical growth rate of 25% over the past five years. Compare this to the other companies in this market with analyst coverage, which are forecast to grow their revenue at 4.3% per year. So it's pretty clear that, while Patrick Industries's revenue growth is expected to slow, it's expected to grow roughly in line with the industry.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider market. There was also a nice increase in the price target, with analysts feeling that the intrinsic value of the business is improving.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Patrick Industries going out to 2021, and you can see them free on our platform here..
You can also see whether Patrick Industries is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
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