DNOW Inc. Just Recorded A 9.5% EPS Beat: Here's What Analysts Are Forecasting Next

DNOW Inc. (NYSE:DNOW) investors will be delighted, with the company turning in some strong numbers with its latest results. Results were good overall, with revenues beating analyst predictions by 2.5% to hit US$628m. Statutory earnings per share (EPS) came in at US$0.23, some 9.5% above whatthe analysts had expected. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

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Taking into account the latest results, the current consensus from DNOW's three analysts is for revenues of US$2.46b in 2025. This would reflect a modest 2.4% increase on its revenue over the past 12 months. Per-share earnings are expected to swell 14% to US$0.89. In the lead-up to this report, the analysts had been modelling revenues of US$2.44b and earnings per share (EPS) of US$0.87 in 2025. 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.

View our latest analysis for DNOW

There were no changes to revenue or earnings estimates or the price target of US$17.00, suggesting that the company has met expectations in its recent result. 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 DNOW, with the most bullish analyst valuing it at US$18.00 and the most bearish at US$16.00 per share. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting DNOW is an easy business to forecast or the the analysts are all using similar 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. We would highlight that DNOW's revenue growth is expected to slow, with the forecast 4.9% annualised growth rate until the end of 2025 being well below the historical 8.3% 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 7.1% 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 DNOW.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. 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$17.00, with the latest estimates not enough to have an impact on their price targets.

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 DNOW analysts - going out to 2027, and you can see them free on our platform here.

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

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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.