Owens Corning Just Beat Earnings Expectations: Here's What Analysts Think Will Happen Next

It's been a good week for Owens Corning (NYSE:OC) shareholders, because the company has just released its latest quarterly results, and the shares gained 5.2% to US$169. Revenues were US$2.3b, approximately in line with expectations, although statutory earnings per share (EPS) performed substantially better. EPS of US$3.40 were also better than expected, beating analyst predictions by 10%. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

Check out our latest analysis for Owens Corning

Following last week's earnings report, Owens Corning's 14 analysts are forecasting 2024 revenues to be US$9.69b, approximately in line with the last 12 months. Statutory earnings per share are predicted to expand 17% to US$14.98. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$9.63b and earnings per share (EPS) of US$13.90 in 2024. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

The consensus price target was unchanged at US$178, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. 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 Owens Corning, with the most bullish analyst valuing it at US$197 and the most bearish at US$160 per share. This is a very narrow spread of estimates, implying either that Owens Corning is an easy company to value, or - more likely - the analysts are relying heavily on some key 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 Owens Corning's revenue growth is expected to slow, with the forecast 0.6% annualised growth rate until the end of 2024 being well below the historical 8.7% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 5.4% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Owens Corning.

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 Owens Corning following these results. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. 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.

With that in mind, we wouldn't be too quick to come to a conclusion on Owens Corning. 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 Owens Corning 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 1 warning sign for Owens Corning you should know about.

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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.