Schnitzer Steel Industries, Inc. Just Missed Earnings And Its Revenue Numbers Were Weaker Than Expected

By
Simply Wall St
Published
January 09, 2022
NasdaqGS:SCHN
Source: Shutterstock

It's shaping up to be a tough period for Schnitzer Steel Industries, Inc. (NASDAQ:SCHN), which a week ago released some disappointing quarterly results that could have a notable impact on how the market views the stock. Schnitzer Steel Industries missed analyst forecasts, with revenues of US$798m and statutory earnings per share (EPS) of US$1.55, falling short by 6.9% and 4.9% respectively. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Schnitzer Steel Industries after the latest results.

See our latest analysis for Schnitzer Steel Industries

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NasdaqGS:SCHN Earnings and Revenue Growth January 9th 2022

Taking into account the latest results, the current consensus from Schnitzer Steel Industries' dual analysts is for revenues of US$3.25b in 2022, which would reflect an okay 6.0% increase on its sales over the past 12 months. Statutory earnings per share are forecast to drop 18% to US$5.83 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$3.43b and earnings per share (EPS) of US$7.08 in 2022. The analysts seem less optimistic after the recent results, reducing their sales forecasts and making a real cut to earnings per share numbers.

Despite the cuts to forecast earnings, there was no real change to the US$66.50 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Schnitzer Steel Industries' past performance and to peers in the same industry. We can infer from the latest estimates that forecasts expect a continuation of Schnitzer Steel Industries'historical trends, as the 8.1% annualised revenue growth to the end of 2022 is roughly in line with the 7.9% annual revenue growth over the past five years. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 0.2% annually. So although Schnitzer Steel Industries is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider industry.

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. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. The consensus price target held steady at US$66.50, with the latest estimates not enough to have an impact on their price targets.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have analyst estimates for Schnitzer Steel Industries going out as far as 2024, and you can see them free on our platform here.

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 2 warning signs with Schnitzer Steel Industries (at least 1 which is a bit unpleasant) , and understanding these should be part of your investment process.

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