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

The AZEK Company Inc. (NYSE:AZEK) came out with its full-year results last week, and we wanted to see how the business is performing and what industry forecasters think of the company following this report. AZEK reported US$1.2b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$0.59 beat expectations, being 6.1% higher than what the analysts expected. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on AZEK after the latest results.

See our latest analysis for AZEK

Taking into account the latest results, the current consensus from AZEK's 15 analysts is for revenues of US$1.37b in 2022, which would reflect a decent 16% increase on its sales over the past 12 months. Statutory earnings per share are predicted to leap 44% to US$0.87. Before this earnings report, the analysts had been forecasting revenues of US$1.34b and earnings per share (EPS) of US$0.88 in 2022. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.

There were no changes to revenue or earnings estimates or the price target of US$52.67, suggesting that the company has met expectations in its recent result. 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 AZEK at US$58.00 per share, while the most bearish prices it at US$47.00. This is a very narrow spread of estimates, implying either that AZEK is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

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. The period to the end of 2022 brings more of the same, according to the analysts, with revenue forecast to display 16% growth on an annualised basis. That is in line with its 17% annual growth over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 6.1% per year. So although AZEK is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider 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. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

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 estimates - from multiple AZEK analysts - going out to 2024, and you can see them free on our platform here.

It is also worth noting that we have found 1 warning sign for AZEK that you need to take into consideration.

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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