Tenaris S.A. (BIT:TEN) came out with its full-year results last week, and we wanted to see how the business is performing and what industry forecasters think of the company following this report. It looks like a credible result overall - although revenues of US$6.5b were what the analysts expected, Tenaris surprised by delivering a (statutory) profit of US$0.93 per share, an impressive 22% above what was forecast. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Taking into account the latest results, the consensus forecast from Tenaris' 21 analysts is for revenues of US$8.51b in 2022, which would reflect a major 31% improvement in sales compared to the last 12 months. Statutory earnings per share are forecast to shrink 2.1% to US$0.91 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$8.44b and earnings per share (EPS) of US$0.88 in 2022. So the consensus seems to have become somewhat more optimistic on Tenaris' earnings potential following these results.
There's been no major changes to the consensus price target of €11.67, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Tenaris at €14.22 per share, while the most bearish prices it at €8.25. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
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. The analysts are definitely expecting Tenaris' growth to accelerate, with the forecast 31% annualised growth to the end of 2022 ranking favourably alongside historical growth of 2.9% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 5.4% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Tenaris to grow faster than the wider industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Tenaris' earnings potential next year. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. The consensus price target held steady at €11.67, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn't be too quick to come to a conclusion on Tenaris. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Tenaris analysts - going out to 2024, and you can see them free on our platform here.
However, before you get too enthused, we've discovered 2 warning signs for Tenaris (1 is concerning!) that you should be aware of.
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.