It’s been a mediocre week for Kronos Worldwide, Inc. (NYSE:KRO) shareholders, with the stock dropping 14% to US$7.70 in the week since its latest annual results. It was an okay report, and revenues came in at US$1.7b, approximately in line with analyst estimates leading up to the results announcement. Following the result, 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 analysts’ statutory forecasts suggest is in store for next year.
Taking into account the latest results, the twin analysts covering Kronos Worldwide provided consensus estimates of US$1.70b revenue in 2020, which would reflect a measurable 2.1% decline on its sales over the past 12 months. Prior to the latest earnings, analysts were forecasting revenues of US$1.80b in 2020, and did not provide an EPS estimate. The consensus seems a bit less optimistic overall, with the revenue forecasts following the latest results.
The average analyst price target fell 9.1% to US$12.50, with analysts clearly having become less optimistic about Kronos Worldwide’s prospects following its latest earnings.
Zooming out to look at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up both against past performance, and against industry growth estimates. We would highlight that sales are expected to reverse, with the forecast 2.1% revenue decline a notable change from historical growth of 4.4% over the last five years. Compare this with our data, which suggests that other companies in the same market are, in aggregate, expected to see their revenue grow 3.7% next year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining – analysts also expect Kronos Worldwide to grow slower than the wider market.
The Bottom Line
The most important thing to take away from these updates is that analysts are definitely optimistic on the business, given that they’ve begun forecasting positive per-share earnings for next year. Unfortunately, analysts also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider market. Even so, earnings per share are more important to the intrinsic value of the business. Analysts also downgraded their price target, suggesting that the latest news has led analysts to become more pessimistic about the intrinsic value of the business.
We have estimates for Kronos Worldwide from its twin analysts , and you can see them free on our platform here.
It might also be worth considering whether Kronos Worldwide’s debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
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