Worthington Steel, Inc. Just Beat Earnings Expectations: Here's What Analysts Think Will Happen Next

editorial-team@simplywallst.com (Simply Wall St)

29 June 2024 at 10:27 am·3-min read

It's been a good week for Worthington Steel, Inc. (NYSE:WS) shareholders, because the company has just released its latest full-year results, and the shares gained 5.3% to US$33.36. Revenues were US$3.4b, approximately in line with expectations, although statutory earnings per share (EPS) performed substantially better. EPS of US$3.11 were also better than expected, beating analyst predictions by 15%. 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 gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

Check out our latest analysis for Worthington Steel

After the latest results, the consensus from Worthington Steel's twin analysts is for revenues of US$3.14b in 2025, which would reflect a considerable 8.3% decline in revenue compared to the last year of performance. Statutory earnings per share are predicted to accumulate 2.0% to US$3.20. Before this earnings report, the analysts had been forecasting revenues of US$3.01b and earnings per share (EPS) of US$2.77 in 2025. There's been a pretty noticeable increase in sentiment, with the analysts upgrading revenues and making a nice increase in earnings per share in particular.

Althoughthe analysts have upgraded their earnings estimates, there was no change to the consensus price target of US$40.00, suggesting that the forecast performance does not have a long term impact on the company's valuation.

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 8.3% by the end of 2025. This indicates a significant reduction from annual growth of 8.2% over the last three years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 5.4% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Worthington Steel is expected to lag the wider industry.

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 Worthington Steel following these results. Fortunately, they also upgraded their revenue estimates, although our data indicates it is expected to 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. At least one analyst has provided forecasts out to 2027, which can be seen for free on our platform here.

We don't want to rain on the parade too much, but we did also find 2 warning signs for Worthington Steel that you need to be mindful of.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com

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Worthington Steel, Inc. Just Beat Earnings Expectations: Here's What Analysts Think Will Happen Next

The Bottom Line

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