Compass Minerals International, Inc. Reported A Surprise Loss, And Analysts Have Updated Their Forecasts

It's been a sad week for Compass Minerals International, Inc. (NYSE:CMP), who've watched their investment drop 10% to US$20.70 in the week since the company reported its first-quarter result. It was a pretty negative result overall, with revenues of US$342m missing analyst predictions by 4.2%. Worse, the business reported a statutory loss of US$1.83 per share, a substantial decline on analyst expectations of a profit. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

View our latest analysis for Compass Minerals International

Following the latest results, Compass Minerals International's eight analysts are now forecasting revenues of US$1.24b in 2024. This would be an okay 3.6% improvement in revenue compared to the last 12 months. Statutory losses are forecast to balloon 27% to US$1.05 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$1.27b and earnings per share (EPS) of US$0.77 in 2024. The analysts have made an abrupt about-face on Compass Minerals International, administering a minor downgrade to to revenue forecasts and slashing the earnings outlook from a profit to loss.

The average price target fell 12% to US$30.00, implicitly signalling that lower earnings per share are a leading indicator for Compass Minerals International's valuation. 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 Compass Minerals International analyst has a price target of US$48.00 per share, while the most pessimistic values it at US$21.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. For example, we noticed that Compass Minerals International's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 4.8% growth to the end of 2024 on an annualised basis. That is well above its historical decline of 3.9% a year over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 4.8% annually. So while Compass Minerals International's revenues are expected to improve, it seems that it is expected to grow at about the same rate as the overall industry.

The Bottom Line

The most important thing to take away is that the analysts are expecting Compass Minerals International to become unprofitable next year. They also downgraded their revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Compass Minerals International's future valuation.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Compass Minerals International going out to 2026, and you can see them free on our platform here..

You should always think about risks though. Case in point, we've spotted 2 warning signs for Compass Minerals International 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.