The annual results for Silgan Holdings Inc. (NASDAQ:SLGN) were released last week, making it a good time to revisit its performance. It looks like the results were a bit of a negative overall. While revenues of US$4.5b were in line with analyst predictions, statutory earnings were less than expected, missing estimates by 2.4% to hit US$1.74 per share. Earnings are an important time for investors, as they can track a company's performance, look at what top 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 analysts' latest (statutory) post-earnings forecasts for next year.
Following last week's earnings report, Silgan Holdings's nine analysts are forecasting 2020 revenues to be US$4.53b, approximately in line with the last 12 months. Statutory earnings per share are expected to soar 31% to US$2.29. In the lead-up to this report, analysts had been modelling revenues of US$4.51b and earnings per share (EPS) of US$2.22 in 2020. Analysts seem to have become more bullish on the business, judging by their new earnings per share estimates.
The consensus price target was unchanged at US$33.59, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Silgan Holdings analyst has a price target of US$41.00 per share, while the most pessimistic values it at US$27.50. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
Another way to assess these estimates is by comparing them to past performance, and seeing whether analysts are more or less bullish relative to other companies in the market. It's pretty clear that analysts expect Silgan Holdings's revenue growth will slow down substantially, with revenues next year expected to grow 0.8%, compared to a historical growth rate of 4.4% over the past five years. Compare this against other companies (with analyst forecasts) in the market, which are in aggregate expected to see revenue growth of 2.8% next year. So it's pretty clear that, while revenue growth is expected to slow down, analysts still expect the wider market to grow faster than Silgan Holdings.
The Bottom Line
The most important thing to take away from this is that analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Silgan Holdings following these results. On the plus side, there were no major changes to revenue estimates; although analyst forecasts imply revenues will perform worse than the wider market. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Still, the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Silgan Holdings going out to 2022, and you can see them free on our platform here.
You can also see whether Silgan Holdings is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
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