Schnitzer Steel Industries, Inc. Just Beat Revenue By 5.0%: Here's What Analysts Think Will Happen Next
Schnitzer Steel Industries, Inc. (NASDAQ:SCHN) came out with its quarterly results last week, and we wanted to see how the business is performing and what industry forecasts think of the company following this report. Results overall were respectable, with statutory earnings of US$2.00 per share roughly in line with what the analyst had forecast. Revenues of US$439m came in 5.0% ahead of analyst predictions. The analyst 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. With this in mind, we've gathered the latest statutory forecasts to see what the analyst is expecting for next year.
See our latest analysis for Schnitzer Steel Industries
Following last week's earnings report, Schnitzer Steel Industries' single analyst are forecasting 2020 revenues to be US$1.79b, approximately in line with the last 12 months. Statutory earnings per share are forecast to nosedive 69% to US$0.04 in the same period. Before this earnings announcement, the analyst had been modelling revenues of US$1.57b and losses of US$0.12 per share in 2020. So we can see that the latest results have sparked a pretty clear upgrade to expectations, with higher revenues expected to lead to profit sooner than previously forecast.
Despite these upgrades,the analyst has not made any major changes to their price target of US$15.50, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth.
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. These estimates imply that sales are expected to slow, with a forecast revenue decline of 0.4%, a significant reduction from annual growth of 6.0% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 6.1% next year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Schnitzer Steel Industries is expected to lag the wider industry.
The Bottom Line
The most important thing to take away is that the analyst now expect Schnitzer Steel Industries to become profitable next year, compared to previous expectations that it would report a loss. Fortunately, they also upgraded their revenue estimates, although our data indicates sales are 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 in mind, we wouldn't be too quick to come to a conclusion on Schnitzer Steel Industries. Long-term earnings power is much more important than next year's profits. We have analyst estimates for Schnitzer Steel Industries going out as far as 2021, and you can see them free on our platform here.
Before you take the next step you should know about the 5 warning signs for Schnitzer Steel Industries that we have uncovered.
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. 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.
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