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Results: Hostess Brands, Inc. Beat Earnings Expectations And Analysts Now Have New Forecasts

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Simply Wall St
·4 min read
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Hostess Brands, Inc. (NASDAQ:TWNK) just released its quarterly report and things are looking bullish. Hostess Brands beat earnings, with revenues hitting US$261m, ahead of expectations, and statutory earnings per share outperforming analyst reckonings by a solid 11%. 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've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

View our latest analysis for Hostess Brands

earnings-and-revenue-growth
earnings-and-revenue-growth

Taking into account the latest results, the consensus forecast from Hostess Brands' ten analysts is for revenues of US$1.05b in 2021, which would reflect an okay 7.1% improvement in sales compared to the last 12 months. Per-share earnings are expected to surge 62% to US$0.82. Before this earnings report, the analysts had been forecasting revenues of US$1.04b and earnings per share (EPS) of US$0.83 in 2021. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.

The analysts reconfirmed their price target of US$16.01, showing that the business is executing well and in line with expectations. 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. There are some variant perceptions on Hostess Brands, with the most bullish analyst valuing it at US$18.00 and the most bearish at US$14.00 per share. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.

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. The analysts are definitely expecting Hostess Brands' growth to accelerate, with the forecast 7.1% growth ranking favourably alongside historical growth of 4.8% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 3.0% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Hostess Brands to grow faster than the wider industry.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target held steady at US$16.01, 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 forecasts for Hostess Brands going out to 2024, and you can see them free on our platform here.

It is also worth noting that we have found 2 warning signs for Hostess Brands (1 is a bit unpleasant!) that you need to take into consideration.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.