ESAB Corporation (NYSE:ESAB) Released Earnings Last Week And Analysts Lifted Their Price Target To US$66.00

ESAB Corporation (NYSE:ESAB) defied analyst predictions to release its yearly results, which were ahead of market expectations. The company beat expectations with revenues of US$2.6b arriving 5.0% ahead of forecasts. Statutory earnings per share (EPS) were US$3.69, 4.2% ahead of estimates. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

View our latest analysis for ESAB

Taking into account the latest results, the current consensus, from the five analysts covering ESAB, is for revenues of US$2.52b in 2023, which would reflect a noticeable 3.0% reduction in ESAB's sales over the past 12 months. Statutory earnings per share are forecast to decrease 6.7% to US$3.49 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$2.49b and earnings per share (EPS) of US$3.42 in 2023. So the consensus seems to have become somewhat more optimistic on ESAB's earnings potential following these results.

The consensus price target rose 12% to US$66.00, suggesting that higher earnings estimates flow through to the stock's valuation as well. 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 ESAB, with the most bullish analyst valuing it at US$72.00 and the most bearish at US$55.00 per share. This is a very narrow spread of estimates, implying either that ESAB 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 ESAB's past performance and to peers in the same industry. We would highlight that sales are expected to reverse, with a forecast 3.0% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 7.1% over the last three years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 4.9% annually for the foreseeable future. It's pretty clear that ESAB's revenues are expected to perform substantially worse than the wider industry.

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 ESAB following these results. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues 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.

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 ESAB analysts - going out to 2025, 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 ESAB 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.