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Astec Industries, Inc. (NASDAQ:ASTE) came out with its annual results last week, and we wanted to see how the business is performing and what industry forecasters think of the company following this report. It looks to have been a decent result overall - while revenue fell marginally short of analyst estimates at US$1.0b, statutory earnings beat expectations by a notable 19%, coming in at US$2.05 per share. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Astec Industries after the latest results.
Taking into account the latest results, the consensus forecast from Astec Industries' four analysts is for revenues of US$1.14b in 2021, which would reflect a notable 11% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to soar 28% to US$2.66. Before this earnings report, the analysts had been forecasting revenues of US$1.15b and earnings per share (EPS) of US$2.54 in 2021. So the consensus seems to have become somewhat more optimistic on Astec Industries' earnings potential following these results.
The analysts have been lifting their price targets on the back of the earnings upgrade, with the consensus price target rising 14% to US$77.33. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Astec Industries at US$92.00 per share, while the most bearish prices it at US$62.00. 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 Astec Industries shareholders.
Of course, another way to look at these forecasts is to place them into context against the industry itself. The analysts are definitely expecting Astec Industries' growth to accelerate, with the forecast 11% annualised growth to the end of 2021 ranking favourably alongside historical growth of 1.3% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 7.6% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Astec Industries is expected to grow much faster than its industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Astec Industries' earnings potential next year. 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.
With that in mind, we wouldn't be too quick to come to a conclusion on Astec Industries. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Astec Industries analysts - going out to 2022, and you can see them free on our platform here.
Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months 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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