One of the biggest stories of last week was how FreightCar America, Inc. (NASDAQ:RAIL) shares plunged 25% in the week since its latest third-quarter results, closing yesterday at US$3.19. Results overall were mixed, with revenues coming in 25% lower than analysts predicted. What’s really surprising is that losses of US$2.83 per share were 665% smaller than analysts had predicted. Earnings are an important time for investors, as they can track a company’s performance, look at what top analysts are forecasting for next year, and see if there’s been a change in sentiment towards the company. So we gathered the latest post-earnings forecasts to see what analysts are forecasting for next year.
After the latest results, the consensus from FreightCar America’s dual analysts is for revenues of US$195m in 2020, which would reflect a sizeable 29% decline in sales compared to the last year of performance. Per-share losses are expected to explode, reaching US$0.60 per share. Before this earnings announcement, analysts had been forecasting revenues of US$248m and losses of US$0.40 per share in 2020. Indeed, we can see that analysts are a lot more bearish about FreightCar America’s prospects following the latest results, administering a large cut to revenue estimates and slashing their EPS estimates to boot.
The consensus price target fell 26% to US$5.33, with analysts clearly concerned about the company following the weaker revenue and earnings outlook.
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 analysts are more or less bullish relative to other companies in the market. One obvious concern is that although revenues are forecast to continue shrinking, the expected 29% decline next year is substantially more severe than the 19% annual decline over the past five years. Yet our data suggests that other companies (with analyst coverage) in the market are expected, in aggregate, to see their revenue decline 2.2% over the coming year. So it looks like FreightCar America is also expected to see its revenues decline at a slower rate than the wider market.
The Bottom Line
The most important thing to take away is that analysts reduced their loss per share estimates for next year, perhaps highlighting increased optimism around FreightCar America’s prospects. 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.
Still, the long-term prospects of the business are much more relevant than next year’s earnings. We have analyst estimates for FreightCar America going out as far as 2021, and you can see them free on our platform here.
We also provide an overview of the FreightCar America Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.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. Thank you for reading.