Quanex Building Products Corporation Just Beat Earnings Expectations: Here's What Analysts Think Will Happen Next
A week ago, Quanex Building Products Corporation (NYSE:NX) came out with a strong set of first-quarter numbers that could potentially lead to a re-rate of the stock. It was overall a positive result, with revenues beating expectations by 3.0% to hit US$239m. Quanex Building Products also reported a statutory profit of US$0.19, which was an impressive 58% above what the analysts had forecast. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
See our latest analysis for Quanex Building Products
Taking into account the latest results, Quanex Building Products' three analysts currently expect revenues in 2024 to be US$1.10b, approximately in line with the last 12 months. Statutory earnings per share are forecast to reduce 8.8% to US$2.41 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$1.09b and earnings per share (EPS) of US$2.42 in 2024. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
With the analysts reconfirming their revenue and earnings forecasts, it's surprising to see that the price target rose 5.7% to US$37.00. It looks as though they previously had some doubts over whether the business would live up to their expectations. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Quanex Building Products, with the most bullish analyst valuing it at US$39.00 and the most bearish at US$34.00 per share. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 0.9% by the end of 2024. This indicates a significant reduction from annual growth of 7.5% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 5.6% annually for the foreseeable future. It's pretty clear that Quanex Building Products' revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will 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.
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 forecasts for Quanex Building Products going out to 2025, and you can see them free on our platform here.
We don't want to rain on the parade too much, but we did also find 1 warning sign for Quanex Building Products that you need to be mindful of.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
