Orion S.A. Just Missed Earnings - But Analysts Have Updated Their Models

Orion S.A. (NYSE:OEC) missed earnings with its latest second-quarter results, disappointing overly-optimistic forecasters. It wasn't a great result overall - while revenue fell marginally short of analyst estimates at US$477m, statutory earnings missed forecasts by an incredible 27%, coming in at just US$0.35 per share. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

See our latest analysis for Orion

Taking into account the latest results, Orion's five analysts currently expect revenues in 2024 to be US$1.94b, approximately in line with the last 12 months. Statutory earnings per share are predicted to surge 40% to US$1.88. Before this earnings report, the analysts had been forecasting revenues of US$1.99b and earnings per share (EPS) of US$1.84 in 2024. If anything, the analysts look to have become slightly more optimistic overall; while they decreased their revenue forecasts, EPS predictions increased and ultimately earnings are more important.

The consensus has made no major changes to the price target of US$28.40, suggesting the forecast improvement in earnings is expected to offset the decline in revenues next year. 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 Orion analyst has a price target of US$32.00 per share, while the most pessimistic values it at US$24.00. This is a very narrow spread of estimates, implying either that Orion is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Orion's past performance and to peers in the same industry. We would highlight that Orion's revenue growth is expected to slow, with the forecast 2.9% annualised growth rate until the end of 2024 being well below the historical 9.4% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 4.8% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Orion.

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 Orion following these results. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. Still, earnings per share are more important to value creation for shareholders. 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.

With that in mind, we wouldn't be too quick to come to a conclusion on Orion. Long-term earnings power is much more important than next year's profits. We have forecasts for Orion going out to 2026, and you can see them free on our platform here.

We don't want to rain on the parade too much, but we did also find 2 warning signs for Orion that you need to be mindful 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com