Shareholders might have noticed that Silgan Holdings Inc. (NASDAQ:SLGN) filed its third-quarter result this time last week. The early response was not positive, with shares down 10.0% to US$35.74 in the past week. The result was positive overall - although revenues of US$1.5b were in line with what the analysts predicted, Silgan Holdings surprised by delivering a statutory profit of US$1.01 per share, modestly greater than 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
After the latest results, the twelve analysts covering Silgan Holdings are now predicting revenues of US$5.04b in 2021. If met, this would reflect an okay 6.3% improvement in sales compared to the last 12 months. Per-share earnings are expected to swell 17% to US$2.99. Before this earnings report, the analysts had been forecasting revenues of US$5.01b and earnings per share (EPS) of US$2.86 in 2021. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.
The consensus price target was unchanged at US$40.67, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Silgan Holdings analyst has a price target of US$46.00 per share, while the most pessimistic values it at US$32.00. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
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. Next year brings more of the same, according to the analysts, with revenue forecast to grow 6.3%, in line with its 5.5% annual growth over the past five years. Compare this with the wider industry, which analyst estimates (in aggregate) suggest will see revenues grow 4.1% next year. So it's pretty clear that Silgan Holdings is forecast to grow substantially faster than its industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Silgan Holdings following these results. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
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 Silgan Holdings going out to 2024, and you can see them free on our platform here.
Don't forget that there may still be risks. For instance, we've identified 2 warning signs for Silgan Holdings (1 is a bit concerning) you should be aware of.
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