Insteel Industries, Inc. Just Missed Earnings - But Analysts Have Updated Their Models

Insteel Industries, Inc. (NYSE:IIIN) missed earnings with its latest quarterly results, disappointing overly-optimistic forecasters. Results showed a clear earnings miss, with US$122m revenue coming in 6.4% lower than what the analystsexpected. Statutory earnings per share (EPS) of US$0.06 missed the mark badly, arriving some 48% below what was 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 Insteel Industries after the latest results.

See our latest analysis for Insteel Industries

Taking into account the latest results, the current consensus, from the two analysts covering Insteel Industries, is for revenues of US$568.4m in 2024. This implies a noticeable 5.9% reduction in Insteel Industries' revenue over the past 12 months. Per-share earnings are expected to shoot up 77% to US$2.04. In the lead-up to this report, the analysts had been modelling revenues of US$587.6m and earnings per share (EPS) of US$3.18 in 2024. The analysts seem less optimistic after the recent results, reducing their revenue forecasts and making a large cut to earnings per share numbers.

What's most unexpected is that the consensus price target rose 5.6% to US$37.50, strongly implying the downgrade to forecasts is not expected to be more than a temporary blip.

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. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 7.8% by the end of 2024. This indicates a significant reduction from annual growth of 12% over the last five 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. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Insteel Industries is expected to lag the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Insteel Industries. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

With that in mind, we wouldn't be too quick to come to a conclusion on Insteel Industries. Long-term earnings power is much more important than next year's profits. At least one analyst has provided forecasts out to 2025, which can be seen for free on our platform here.

However, before you get too enthused, we've discovered 1 warning sign for Insteel Industries that 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.