New Forecasts: Here's What Analysts Think The Future Holds For Encore Wire Corporation (NASDAQ:WIRE)

Celebrations may be in order for Encore Wire Corporation (NASDAQ:WIRE) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with analysts modelling a real improvement in business performance. Encore Wire has also found favour with investors, with the stock up an impressive 20% to US$200 over the past week. We'll be curious to see if these new estimates convince the market to lift the stock price higher still.

Following the latest upgrade, the current consensus, from the dual analysts covering Encore Wire, is for revenues of US$2.9b in 2023, which would reflect a measurable 5.3% reduction in Encore Wire's sales over the past 12 months. Statutory earnings per share are supposed to nosedive 48% to US$20.51 in the same period. Previously, the analysts had been modelling revenues of US$2.5b and earnings per share (EPS) of US$16.09 in 2023. So we can see there's been a pretty clear increase in analyst sentiment in recent times, with both revenues and earnings per share receiving a decent lift in the latest estimates.

View our latest analysis for Encore Wire

It will come as no surprise to learn that the analysts have increased their price target for Encore Wire 26% to US$253 on the back of these upgrades. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Encore Wire at US$255 per share, while the most bearish prices it at US$250. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that the analysts have a clear 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. We would highlight that sales are expected to reverse, with a forecast 5.3% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 23% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 9.1% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Encore Wire is expected to lag the wider industry.

The Bottom Line

The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for this year. Fortunately, they also upgraded their revenue estimates, and are forecasting revenues to grow slower than the wider market. With a serious upgrade to expectations and a rising price target, it might be time to take another look at Encore Wire.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have analyst estimates for Encore Wire going out as far as 2024, and you can see them 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.