Earnings Beat: Arcosa, Inc. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models

It's been a mediocre week for Arcosa, Inc. (NYSE:ACA) shareholders, with the stock dropping 17% to US$76.27 in the week since its latest second-quarter results. Revenues were US$665m, approximately in line with expectations, although statutory earnings per share (EPS) performed substantially better. EPS of US$0.93 were also better than expected, beating analyst predictions by 13%. 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 gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

Check out our latest analysis for Arcosa

Following the latest results, Arcosa's five analysts are now forecasting revenues of US$2.65b in 2024. This would be a solid 8.8% improvement in revenue compared to the last 12 months. Per-share earnings are expected to surge 21% to US$3.63. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$2.66b and earnings per share (EPS) of US$3.66 in 2024. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.

With the analysts reconfirming their revenue and earnings forecasts, it's surprising to see that the price target rose 7.2% to US$107. It looks as though they previously had some doubts over whether the business would live up to their expectations. 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 Arcosa at US$110 per share, while the most bearish prices it at US$100.00. 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 Arcosa's rate of growth is expected to accelerate meaningfully, with the forecast 18% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 7.4% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 8.0% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Arcosa is expected to grow much faster than its industry.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

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. We have forecasts for Arcosa going out to 2025, and you can see them free on our platform here.

And what about risks? Every company has them, and we've spotted 2 warning signs for Arcosa 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.

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