PQ Group Holdings Inc. Earnings Missed Analyst Estimates: Here's What Analysts Are Forecasting Now
It's been a good week for PQ Group Holdings Inc. (NYSE:PQG) shareholders, because the company has just released its latest third-quarter results, and the shares gained 4.6% to US$12.09. Statutory earnings per share fell badly short of expectations, coming in at US$0.06, some 77% below analyst forecasts, although revenues were okay, approximately in line with analyst estimates at US$380m. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Check out our latest analysis for PQ Group Holdings
Taking into account the latest results, the eight analysts covering PQ Group Holdings provided consensus estimates of US$1.38b revenue in 2021, which would reflect a perceptible 5.4% decline on its sales over the past 12 months. Per-share earnings are expected to leap 209% to US$0.98. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$1.43b and earnings per share (EPS) of US$1.02 in 2021. It's pretty clear that pessimism has reared its head after the latest results, leading to a weaker revenue outlook and a small dip in earnings per share estimates.
The analysts made no major changes to their price target of US$15.31, suggesting the downgrades are not expected to have a long-term impact on PQ Group Holdings' valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values PQ Group Holdings at US$19.00 per share, while the most bearish prices it at US$12.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await PQ Group Holdings shareholders.
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. These estimates imply that sales are expected to slow, with a forecast revenue decline of 5.4%, a significant reduction from annual growth of 11% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 5.5% next year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - PQ Group Holdings is expected to lag the wider industry.
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 negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider industry. The consensus price target held steady at US$15.31, 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 estimates - from multiple PQ Group Holdings analysts - going out to 2023, and you can see them free on our platform here.
And what about risks? Every company has them, and we've spotted 3 warning signs for PQ Group Holdings (of which 1 is a bit concerning!) 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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