Results: Alamo Group Inc. Exceeded Expectations And The Consensus Has Updated Its Estimates

Shareholders of Alamo Group Inc. (NYSE:ALG) will be pleased this week, given that the stock price is up 10% to US$191 following its latest quarterly results. Revenues were US$391m, approximately in line with whatthe analysts expected, although statutory earnings per share (EPS) crushed expectations, coming in at US$2.64, an impressive 22% ahead of estimates. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

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Following last week's earnings report, Alamo Group's four analysts are forecasting 2025 revenues to be US$1.61b, approximately in line with the last 12 months. Statutory earnings per share are predicted to ascend 12% to US$10.75. Before this earnings report, the analysts had been forecasting revenues of US$1.62b and earnings per share (EPS) of US$9.73 in 2025. There was no real change to the revenue estimates, but the analysts do seem more bullish on earnings, given the nice gain to earnings per share expectations following these results.

See our latest analysis for Alamo Group

The consensus price target was unchanged at US$206, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. 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. There are some variant perceptions on Alamo Group, with the most bullish analyst valuing it at US$210 and the most bearish at US$195 per share. This is a very narrow spread of estimates, implying either that Alamo Group is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Alamo Group's past performance and to peers in the same industry. We would highlight that Alamo Group's revenue growth is expected to slow, with the forecast 1.6% annualised growth rate until the end of 2025 being well below the historical 8.7% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 3.7% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Alamo Group.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Alamo Group following these results. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. The consensus price target held steady at US$206, with the latest estimates not enough to have an impact on their price targets.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Alamo Group going out to 2026, and you can see them free on our platform here.

You should always think about risks though. Case in point, we've spotted 1 warning sign for Alamo Group you should be aware of.

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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.