Barnes Group Inc. Just Released Its Yearly Earnings: Here's What Analysts Think

There's been a notable change in appetite for Barnes Group Inc. (NYSE:B) shares in the week since its yearly report, with the stock down 18% to US$54.22. Barnes Group reported in line with analyst predictions, delivering revenues of US$1.5b and statutory earnings per share of US$3.07, suggesting the business is executing well and in line with its plan. 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. So we gathered the latest post-earnings forecasts to see what analysts' statutory forecasts suggest is in store for next year.

View our latest analysis for Barnes Group

After the latest results, the consensus from Barnes Group's six analysts is for revenues of US$1.45b in 2020, which would reflect a perceptible 2.5% decline in sales compared to the last year of performance. Statutory per share are forecast to be US$3.13, approximately in line with the last 12 months. In the lead-up to this report, analysts had been modelling revenues of US$1.51b and earnings per share (EPS) of US$3.42 in 2020. It's pretty clear that analyst sentiment has fallen after the latest results, leading to lower revenue forecasts and a small dip in earnings per share estimates.

Analysts made no major changes to their price target of US$68.86, suggesting the downgrades are not expected to have a long-term impact on Barnes Group's valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Barnes Group, with the most bullish analyst valuing it at US$78.00 and the most bearish at US$57.00 per share. 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.

It can be useful to take a broader overview by seeing how analyst forecasts compare, both to the Barnes Group's past performance and to peers in the same market. These estimates imply that sales are expected to slow, with a forecast revenue decline of 2.5% a significant reduction from annual growth of 5.6% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same market are forecast to see their revenue grow 2.0% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - analysts also expect Barnes Group to grow slower than the wider market.

The Bottom Line

The most important thing to take away is that analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Unfortunately, analysts also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider market. Even so, earnings per share are more important to the intrinsic value of the business. 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.

With that in mind, we wouldn't be too quick to come to a conclusion on Barnes Group. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Barnes Group analysts - going out to 2022, and you can see them free on our platform here.

You can also see whether Barnes Group is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

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