Forterra plc Just Recorded A 7.6% Revenue Beat: Here's What Analysts Think

Last week, you might have seen that Forterra plc (LON:FORT) released its interim result to the market. The early response was not positive, with shares down 2.6% to UK£1.77 in the past week. It was a workmanlike result, with revenues of UK£162m coming in 7.6% ahead of expectations, and statutory earnings per share of UK£0.062, in line with analyst appraisals. The analysts 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 analysts are expecting for next year.

See our latest analysis for Forterra

Following the latest results, Forterra's ten analysts are now forecasting revenues of UK£332.6m in 2024. This would be a reasonable 2.2% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to shoot up 96% to UK£0.076. Yet prior to the latest earnings, the analysts had been anticipated revenues of UK£352.5m and earnings per share (EPS) of UK£0.078 in 2024. It's pretty clear that pessimism has reared its head after the latest results, leading to a weaker revenue outlook and a minor downgrade to earnings per share estimates.

The analysts made no major changes to their price target of UK£1.87, suggesting the downgrades are not expected to have a long-term impact on Forterra's valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Forterra, with the most bullish analyst valuing it at UK£2.10 and the most bearish at UK£1.70 per share. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's clear from the latest estimates that Forterra's rate of growth is expected to accelerate meaningfully, with the forecast 4.5% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 2.1% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to see revenue growth of 6.9% annually. It seems obvious that, while the future growth outlook is brighter than the recent past, Forterra is expected to grow slower than 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 they 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.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Forterra going out to 2026, and you can see them free on our platform here..

You still need to take note of risks, for example - Forterra has 3 warning signs (and 1 which doesn't sit too well with us) we think you should know about.

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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