New Forecasts: Here's What Analysts Think The Future Holds For FreightCar America, Inc. (NASDAQ:RAIL)

Celebrations may be in order for FreightCar America, Inc. (NASDAQ:RAIL) shareholders, with the covering analyst delivering a significant upgrade to their statutory estimates for the company. The consensus statutory numbers for both revenue and earnings per share (EPS) increased, with their view clearly much more bullish on the company's business prospects. The market may be pricing in some blue sky too, with the share price gaining 40% to US$5.83 in the last 7 days. It will be interesting to see if today's upgrade is enough to propel the stock even higher.

After this upgrade, FreightCar America's solitary analyst is now forecasting revenues of US$301m in 2022. This would be a major 48% improvement in sales compared to the last 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 92% to US$0.20. Yet prior to the latest estimates, the analyst had been forecasting revenues of US$273m and losses of US$0.25 per share in 2022. So there's been quite a change-up of views after the recent consensus updates, with the analyst making a sizeable increase to their revenue forecasts while also reducing the estimated loss as the business grows towards breakeven.

View our latest analysis for FreightCar America

The consensus price target rose 9.5% to US$5.75, with the analyst encouraged by the higher revenue and lower forecast losses for this year. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on FreightCar America, with the most bullish analyst valuing it at US$6.50 and the most bearish at US$5.00 per share. With such a narrow range of valuations, analysts apparently share similar views on what they think the business is worth.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. One thing stands out from these estimates, which is that FreightCar America is forecast to grow faster in the future than it has in the past, with revenues expected to display 48% annualised growth until the end of 2022. If achieved, this would be a much better result than the 29% annual decline over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 7.1% per year. Not only are FreightCar America's revenues expected to improve, it seems that the analyst is also expecting it to grow faster than the wider industry.

The Bottom Line

The highlight for us was that the consensus reduced its estimated losses this year, perhaps suggesting FreightCar America is moving incrementally towards profitability. Fortunately, the analyst also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. With a serious upgrade to expectations and a rising price target, it might be time to take another look at FreightCar America.

The covering analyst is clearly in love with FreightCar America at the moment, but before diving in - you should be aware that we've identified some warning flags with the business, such as a short cash runway. You can learn more, and discover the 3 other risks we've identified, for free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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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.