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Results: Neenah, Inc. Exceeded Expectations And The Consensus Has Updated Its Estimates

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Simply Wall St
·4 min read
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Neenah, Inc. (NYSE:NP) defied analyst predictions to release its quarterly results, which were ahead of market expectations. It was overall a positive result, with revenues beating expectations by 4.3% to hit US$191m. Neenah also reported a statutory profit of US$0.46, which was an impressive 92% above what the analysts had forecast. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

Check out our latest analysis for Neenah

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Following last week's earnings report, Neenah's three analysts are forecasting 2021 revenues to be US$813.2m, approximately in line with the last 12 months. Neenah is also expected to turn profitable, with statutory earnings of US$2.89 per share. In the lead-up to this report, the analysts had been modelling revenues of US$842.6m and earnings per share (EPS) of US$2.75 in 2021. So it's pretty clear that while sentiment around revenues has declined following the latest results, the analysts are now more bullish on the company's earnings power.

There's been no real change to the average price target of US$53.33, with the lower revenue and higher earnings forecasts not expected to meaningfully impact the company's valuation over a longer timeframe. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Neenah, with the most bullish analyst valuing it at US$55.00 and the most bearish at US$50.00 per share. This is a very narrow spread of estimates, implying either that Neenah is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

Of course, another way to look at these forecasts is to place them into context against the industry itself. The analysts are definitely expecting Neenah's growth to accelerate, with the forecast 1.7% growth ranking favourably alongside historical growth of 0.05% 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 0.7% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Neenah 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 Neenah's earnings potential next year. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. Yet - earnings are more important to the intrinsic value of the business. The consensus price target held steady at US$53.33, with the latest estimates not enough to have an impact on their price targets.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Neenah going out to 2022, 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 2 warning signs for Neenah (1 doesn't sit too well with us!) that you need to be mindful of.

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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