One thing we could say about the analysts on Cincinnati Financial Corporation (NASDAQ:CINF) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon.
Following the downgrade, the consensus from four analysts covering Cincinnati Financial is for revenues of US$6.1b in 2022, implying a chunky 14% decline in sales compared to the last 12 months. Following this this downgrade, earnings are now expected to tip over into loss-making territory, with the analysts forecasting losses of US$4.25 per share in 2022. Previously, the analysts had been modelling revenues of US$7.2b and earnings per share (EPS) of US$2.34 in 2022. There looks to have been a major change in sentiment regarding Cincinnati Financial's prospects, with a measurable cut to revenues and the analysts now forecasting a loss instead of a profit.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Cincinnati Financial's past performance and to peers in the same industry. We would highlight that sales are expected to reverse, with a forecast 26% annualised revenue decline to the end of 2022. That is a notable change from historical growth of 11% 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 5.5% annually for the foreseeable future. It's pretty clear that Cincinnati Financial's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most important thing to take away is that analysts are expecting Cincinnati Financial to become unprofitable this year. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. We wouldn't be surprised to find shareholders feeling a bit shell-shocked, after these downgrades. It looks like analysts have become a lot more bearish on Cincinnati Financial, and their negativity could be grounds for caution.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Cincinnati Financial analysts - going out to 2024, and you can see them free on our platform here.
Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.
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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.
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