Reynolds Consumer Products Inc. (NASDAQ:REYN) Just Reported Annual Earnings: Have Analysts Changed Their Mind On The Stock?
It's been a good week for Reynolds Consumer Products Inc. (NASDAQ:REYN) shareholders, because the company has just released its latest annual results, and the shares gained 2.5% to US$28.43. The result was positive overall - although revenues of US$3.8b were in line with what the analysts predicted, Reynolds Consumer Products surprised by delivering a statutory profit of US$1.42 per share, modestly greater than expected. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Check out our latest analysis for Reynolds Consumer Products
Taking into account the latest results, the eight analysts covering Reynolds Consumer Products provided consensus estimates of US$3.61b revenue in 2024, which would reflect a measurable 3.9% decline over the past 12 months. Statutory earnings per share are predicted to ascend 14% to US$1.61. In the lead-up to this report, the analysts had been modelling revenues of US$3.76b and earnings per share (EPS) of US$1.55 in 2024. If anything, the analysts look to have become slightly more optimistic overall; while they decreased their revenue forecasts, EPS predictions increased and ultimately earnings are more important.
There's been no real change to the average price target of US$30.56, with the lower revenue and higher earnings forecasts not expected to meaningfully impact the company's valuation over a longer timeframe. 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. The most optimistic Reynolds Consumer Products analyst has a price target of US$35.00 per share, while the most pessimistic values it at US$27.00. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Reynolds Consumer Products is an easy business to forecast or the the analysts are all using similar assumptions.
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. We would highlight that revenue is expected to reverse, with a forecast 3.9% annualised decline to the end of 2024. That is a notable change from historical growth of 5.7% 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 3.6% per year. It's pretty clear that Reynolds Consumer Products' revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Reynolds Consumer Products' earnings potential next year. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. Even so, long term profitability is more important for the value creation process. The consensus price target held steady at US$30.56, with the latest estimates not enough to have an impact on their price targets.
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 Reynolds Consumer Products going out to 2026, and you can see them free on our platform here.
And what about risks? Every company has them, and we've spotted 2 warning signs for Reynolds Consumer Products you should know about.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
