Pentair plc Just Beat EPS By 37%: Here's What Analysts Think Will Happen Next
Pentair plc (NYSE:PNR) just released its latest quarterly results and things are looking bullish. It was a solid earnings report, with revenues and statutory earnings per share (EPS) both coming in strong. Revenues were 17% higher than the analysts had forecast, at US$799m, while EPS were US$0.66 beating analyst models by 37%. 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 Pentair
Taking into account the latest results, the most recent consensus for Pentair from 17 analysts is for revenues of US$3.10b in 2021 which, if met, would be a modest 4.2% increase on its sales over the past 12 months. Per-share earnings are expected to grow 17% to US$2.53. In the lead-up to this report, the analysts had been modelling revenues of US$2.99b and earnings per share (EPS) of US$2.41 in 2021. It looks like there's been a modest increase in sentiment following the latest results, withthe analysts becoming a bit more optimistic in their predictions for both revenues and earnings.
With these upgrades, we're not surprised to see that the analysts have lifted their price target 12% to US$56.47per share. 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 Pentair analyst has a price target of US$66.00 per share, while the most pessimistic values it at US$46.00. 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.
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. For example, we noticed that Pentair's rate of growth is expected to accelerate meaningfully, with revenues forecast to grow 4.2%, well above its historical decline of 12% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 7.3% per year. Although Pentair's revenues are expected to improve, it seems that the analysts are still bearish on the business, forecasting it to grow slower 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 Pentair following these results. Fortunately, they also upgraded their revenue estimates, although our data indicates sales are expected to perform worse 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.
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 estimates - from multiple Pentair analysts - going out to 2024, and you can see them free on our platform here.
You can also view our analysis of Pentair's balance sheet, and whether we think Pentair is carrying too much debt, for free 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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