Yahoo Finance Graco Inc. Just Missed Earnings And Its EPS Looked Sad - But Analysts Have Updated Their Models
As you might know, Graco Inc. (NYSE:GGG) last week released its latest first-quarter, and things did not turn out so great for shareholders. Graco missed analyst forecasts, with revenues of US$374m and statutory earnings per share (EPS) of US$0.42, falling short by 3.3% and 5.6% respectively. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Check out our latest analysis for Graco
Taking into account the latest results, the ten analysts covering Graco provided consensus estimates of US$1.44b revenue in 2020, which would reflect a chunky 11% decline on its sales over the past 12 months. Statutory earnings per share are forecast to dive 29% to US$1.41 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$1.53b and earnings per share (EPS) of US$1.56 in 2020. It's pretty clear that pessimism has reared its head after the latest results, leading to a weaker revenue outlook and a small dip in earnings per share estimates.
The analysts made no major changes to their price target of US$45.71, suggesting the downgrades are not expected to have a long-term impact on Graco'svaluation. 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. The most optimistic Graco analyst has a price target of US$50.00 per share, while the most pessimistic values it at US$43.00. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Graco's past performance and to peers in the same industry. We would highlight that sales are expected to reverse, with the forecast 11% revenue decline a notable change from historical growth of 6.9% 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 1.7% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Graco 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. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues 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 said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Graco going out to 2023, and you can see them free on our platform here.
You still need to take note of risks, for example - Graco has 2 warning signs we think you should be aware of.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.
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