Armstrong World Industries, Inc. (NYSE:AWI) Released Earnings Last Week And Analysts Lifted Their Price Target To US$118

It's been a pretty great week for Armstrong World Industries, Inc. (NYSE:AWI) shareholders, with its shares surging 14% to US$121 in the week since its latest annual results. Armstrong World Industries reported in line with analyst predictions, delivering revenues of US$1.3b and statutory earnings per share of US$4.99, suggesting the business is executing well and in line with its plan. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

View our latest analysis for Armstrong World Industries

After the latest results, the eight analysts covering Armstrong World Industries are now predicting revenues of US$1.35b in 2024. If met, this would reflect a credible 4.2% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to step up 13% to US$5.78. Before this earnings report, the analysts had been forecasting revenues of US$1.33b and earnings per share (EPS) of US$5.47 in 2024. So the consensus seems to have become somewhat more optimistic on Armstrong World Industries' earnings potential following these results.

The analysts have been lifting their price targets on the back of the earnings upgrade, with the consensus price target rising 19% to US$118. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Armstrong World Industries analyst has a price target of US$132 per share, while the most pessimistic values it at US$94.10. 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.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that Armstrong World Industries' revenue growth is expected to slow, with the forecast 4.2% annualised growth rate until the end of 2024 being well below the historical 6.3% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 5.2% annually. Factoring in the forecast slowdown in growth, it seems obvious that Armstrong World Industries is also expected to grow slower than other industry participants.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Armstrong World Industries' earnings potential next year. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse 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.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Armstrong World Industries 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 Armstrong World Industries you should be aware of.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.