LSB Industries, Inc. Earnings Missed Analyst Estimates: Here's What Analysts Are Forecasting Now

It's been a good week for LSB Industries, Inc. (NYSE:LXU) shareholders, because the company has just released its latest full-year results, and the shares gained 3.4% to US$7.54. It looks like a pretty bad result, all things considered. Although revenues of US$594m were in line with analyst predictions, statutory earnings fell badly short, missing estimates by 25% to hit US$0.37 per share. 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 collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

Check out our latest analysis for LSB Industries

Taking into account the latest results, the current consensus, from the eight analysts covering LSB Industries, is for revenues of US$527.3m in 2024. This implies an uncomfortable 11% reduction in LSB Industries' revenue over the past 12 months. Statutory earnings per share are expected to decrease 5.7% to US$0.36 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$539.7m and earnings per share (EPS) of US$0.57 in 2024. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a pretty serious reduction to earnings per share estimates.

It'll come as no surprise then, to learn that the analysts have cut their price target 10% to US$10.78. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic LSB Industries analyst has a price target of US$23.00 per share, while the most pessimistic values it at US$7.75. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how analysts think this business will perform. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.

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. We would highlight that revenue is expected to reverse, with a forecast 11% annualised decline to the end of 2024. That is a notable change from historical growth of 20% 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 4.5% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - LSB Industries is expected to lag 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. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of LSB Industries' 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. We have forecasts for LSB Industries going out to 2026, and you can see them free on our platform here.

Plus, you should also learn about the 3 warning signs we've spotted with LSB Industries (including 1 which is potentially serious) .

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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.