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There's been a major selloff in World Fuel Services Corporation (NYSE:INT) shares in the week since it released its annual report, with the stock down 22% to US$28.28. Revenues were US$37b, approximately in line with expectations, although statutory earnings per share (EPS) performed substantially better. EPS of US$2.69 were also better than expected, beating analyst predictions by 12%. This is an important time for investors, as they can track a company's performance in its report, look at what top analysts are forecasting for next year, and see if there has been any change to expectations for the business. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Following the latest results, World Fuel Services's dual analysts are now forecasting revenues of US$39.0b in 2020. This would be a reasonable 5.9% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to rise 5.3% to US$2.85. Before this earnings report, analysts had been forecasting revenues of US$42.3b and earnings per share (EPS) of US$2.80 in 2020. The consensus seems maybe a little more pessimistic, trimming their revenue forecasts after the latest results even though there was no change to its EPS estimates.
The average analyst price target was reduced 12% to US$39.00, with the lower revenue forecasts indicating negative sentiment towards World Fuel Services, even though earnings forecasts were unchanged.
It can also be useful to step back and take a broader view of how analyst forecasts compare to World Fuel Services's performance in recent years. Analysts are definitely expecting World Fuel Services's growth to accelerate, with the forecast 5.9% growth ranking favourably alongside historical growth of 2.3% per annum over the past five years. Compare this with other companies in the same market, which are forecast to grow their revenue 5.1% next year. Factoring in the forecast acceleration in revenue, it's pretty clear that World Fuel Services is expected to grow at about the same rate as the wider market.
The Bottom Line
The most obvious conclusion from these results is that there's been no major change in the business' prospects in recent times, with analysts holding earnings per share steady, in line with previous estimates. Lamentably, they also downgraded their sales forecasts, but the business is still expected to grow at roughly the same rate as the market itself. Even so, earnings are more important to the intrinsic value of the business. Analysts also downgraded their price target, suggesting that the latest news has led analysts to become more pessimistic about the intrinsic value of the business.
With that in mind, we wouldn't be too quick to come to a conclusion on World Fuel Services. Long-term earnings power is much more important than next year's profits. We have analyst estimates for World Fuel Services going out as far as 2021, and you can see them free on our platform here.
You can also view our analysis of World Fuel Services's balance sheet, and whether we think World Fuel Services is carrying too much debt, for free on our platform here.
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