Earnings Update: Here's Why Analysts Just Lifted Their Trex Company, Inc. (NYSE:TREX) Price Target To US$96.63

The annual results for Trex Company, Inc. (NYSE:TREX) were released last week, making it a good time to revisit its performance. Results were roughly in line with estimates, with revenues of US$1.1b and statutory earnings per share of US$1.89. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

Check out our latest analysis for Trex Company

Taking into account the latest results, the consensus forecast from Trex Company's 17 analysts is for revenues of US$1.24b in 2024. This reflects a notable 13% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to climb 16% to US$2.19. Before this earnings report, the analysts had been forecasting revenues of US$1.22b and earnings per share (EPS) of US$2.17 in 2024. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.

With the analysts reconfirming their revenue and earnings forecasts, it's surprising to see that the price target rose 19% to US$96.63. It looks as though they previously had some doubts over whether the business would live up to their expectations. 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 Trex Company at US$120 per share, while the most bearish prices it at US$65.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Trex Company shareholders.

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 can infer from the latest estimates that forecasts expect a continuation of Trex Company'shistorical trends, as the 13% annualised revenue growth to the end of 2024 is roughly in line with the 11% annual growth over the past five years. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 5.3% annually. So although Trex Company is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider industry.

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. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. 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 said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Trex Company going out to 2026, and you can see them free on our platform here.

You can also view our analysis of Trex Company's balance sheet, and whether we think Trex Company is carrying too much debt, for free on our platform here.

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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.