Last week, you might have seen that The Andersons, Inc. (NASDAQ:ANDE) released its yearly result to the market. The early response was not positive, with shares down 4.7% to US$52.04 in the past week. Revenues US$15b disappointed slightly, at6.6% below what the analysts had predicted. Profits were a relative bright spot, with statutory per-share earnings of US$2.94 coming in 16% above what was anticipated. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Andersons after the latest results.
After the latest results, the consensus from Andersons' three analysts is for revenues of US$13.9b in 2024, which would reflect a perceptible 5.7% decline in revenue compared to the last year of performance. Statutory earnings per share are expected to decline 16% to US$2.55 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$15.4b and earnings per share (EPS) of US$3.89 in 2024. The analysts seem less optimistic after the recent results, reducing their revenue forecasts and making a pretty serious reduction to earnings per share numbers.
What's most unexpected is that the consensus price target rose 11% to US$68.33, strongly implying the downgrade to forecasts is not expected to be more than a temporary blip. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Andersons, with the most bullish analyst valuing it at US$70.00 and the most bearish at US$65.00 per share. 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.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 5.7% by the end of 2024. This indicates a significant reduction from annual growth of 26% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 4.4% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Andersons is expected to lag the wider industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. 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. 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.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Andersons going out to 2025, and you can see them free on our platform here..
You still need to take note of risks, for example - Andersons has 2 warning signs we think you should be aware of.
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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.