As you might know, GrafTech International Ltd. (NYSE:EAF) last week released its latest third-quarter, and things did not turn out so great for shareholders. It definitely looks like a negative result overall with revenues falling 13% short of analyst estimates at US$159m. Statutory losses were US$0.09 per share, 130% bigger than what the analysts expected. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. 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 GrafTech International
Following last week's earnings report, GrafTech International's four analysts are forecasting 2024 revenues to be US$716.5m, approximately in line with the last 12 months. Earnings are expected to tip over into lossmaking territory, with the analysts forecasting statutory losses of -US$0.057 per share in 2024. Before this earnings report, the analysts had been forecasting revenues of US$861.8m and earnings per share (EPS) of US$0.44 in 2024. So we can see that the consensus has become notably more bearish on GrafTech International's outlook following these results, with a real cut to next year's revenue estimates. Furthermore, they expect the business to be loss-making next year, compared to their previous calls for a profit.
The consensus price target fell 8.3% to US$3.67, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook. 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 GrafTech International analyst has a price target of US$4.00 per share, while the most pessimistic values it at US$3.00. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. One thing that stands out from these estimates is that shrinking revenues are expected to moderate over the period ending 2024 compared to the historical decline of 13% per annum over the past five years. Compare this against analyst estimates for companies in the broader industry, which suggest that revenues (in aggregate) are expected to grow 6.7% annually. So while a broad number of companies are forecast to grow, unfortunately GrafTech International is expected to see its revenue affected worse than other companies in the industry.
The Bottom Line
The most important thing to take away is that the analysts are expecting GrafTech International to become unprofitable 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. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for GrafTech International going out to 2025, and you can see them free on our platform here..
Plus, you should also learn about the 2 warning signs we've spotted with GrafTech International (including 1 which makes us a bit uncomfortable) .
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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.