Simpson Manufacturing Co., Inc. Just Missed EPS By 8.0%: Here's What Analysts Think Will Happen Next

As you might know, Simpson Manufacturing Co., Inc. (NYSE:SSD) last week released its latest first-quarter, and things did not turn out so great for shareholders. Simpson Manufacturing missed analyst forecasts, with revenues of US$531m and statutory earnings per share (EPS) of US$1.77, falling short by 2.6% and 8.0% respectively. 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. 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 Simpson Manufacturing

Taking into account the latest results, the consensus forecast from Simpson Manufacturing's four analysts is for revenues of US$2.27b in 2024. This reflects a credible 2.6% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to increase 3.7% to US$8.35. Before this earnings report, the analysts had been forecasting revenues of US$2.31b and earnings per share (EPS) of US$8.69 in 2024. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.

It might be a surprise to learn that the consensus price target was broadly unchanged at US$194, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on 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. Currently, the most bullish analyst values Simpson Manufacturing at US$208 per share, while the most bearish prices it at US$180. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that Simpson Manufacturing's revenue growth is expected to slow, with the forecast 3.5% annualised growth rate until the end of 2024 being well below the historical 17% 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 5.5% per year. Factoring in the forecast slowdown in growth, it seems obvious that Simpson Manufacturing is also expected to grow slower than other industry participants.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Simpson Manufacturing's revenue is expected to perform worse than the wider industry. The consensus price target held steady at US$194, 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 forecasts for Simpson Manufacturing going out to 2026, and you can see them free on our platform here.

You still need to take note of risks, for example - Simpson Manufacturing has 1 warning sign we think 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.