Ternium S.A. Just Beat EPS By 147%: Here's What Analysts Think Will Happen Next
Ternium S.A. (NYSE:TX) just released its third-quarter report and things are looking bullish. The company beat both earnings and revenue forecasts, with revenue of US$2.1b, some 5.6% above estimates, and statutory earnings per share (EPS) coming in at US$0.74, 147% ahead of expectations. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
View our latest analysis for Ternium
Taking into account the latest results, the most recent consensus for Ternium from twelve analysts is for revenues of US$8.74b in 2021 which, if met, would be a modest 4.0% increase on its sales over the past 12 months. Per-share earnings are expected to soar 90% to US$2.40. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$8.81b and earnings per share (EPS) of US$2.22 in 2021. So the consensus seems to have become somewhat more optimistic on Ternium's earnings potential following these results.
The consensus price target rose 6.5% to US$22.18, suggesting that higher earnings estimates flow through to the stock's valuation as well. 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 Ternium analyst has a price target of US$28.00 per share, while the most pessimistic values it at US$12.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's pretty clear that there is an expectation that Ternium's revenue growth will slow down substantially, with revenues next year expected to grow 4.0%, compared to a historical growth rate of 6.8% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 7.0% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Ternium.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Ternium following these results. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Ternium's revenues are expected to perform worse 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 Ternium. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Ternium going out to 2024, and you can see them free on our platform here..
Even so, be aware that Ternium is showing 4 warning signs in our investment analysis , you should know about...
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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