Investors in Schweitzer-Mauduit International, Inc. (NYSE:SWM) had a good week, as its shares rose 9.0% to close at US$44.13 following the release of its quarterly results. Schweitzer-Mauduit International reported US$256m in revenue, roughly in line with analyst forecasts, although earnings per share (EPS) of US$0.90 beat expectations, being 7.8% higher than what analysts expected. Following the result, 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 consensus estimates to see what could be in store for next year.
Following last week’s earnings report, Schweitzer-Mauduit International’s two analysts are forecasting 2020 revenues to be US$1.0b, approximately in line with the last 12 months. Earnings per share are expected to soar 44% to US$3.40. In the lead-up to this report, analysts had been modelling revenues of US$1.0b and earnings per share (EPS) of US$3.39 in 2020. The consensus analysts don’t seem to have seen anything in these results that would have changed their view on the business, given there’s been no major change to their estimates.
With analysts reconfirming their revenue and earnings forecasts, it’s surprising to see that the price target rose 8.0% to US$47.50. It looks as though analysts previously had some doubts over whether the business would live up to their expectations.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how analyst forecasts compare, both to the Schweitzer-Mauduit International’s past performance and to peers in the same market. These estimates imply that sales are expected to slow, with a forecast revenue decline of 0.4% a significant reduction from annual growth of 7.6% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same market are forecast to see their revenue grow 2.8% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining – analysts also expect Schweitzer-Mauduit International to grow slower than the wider market.
The Bottom Line
The most important thing to take away is that there’s been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations – although our data does suggest that Schweitzer-Mauduit International’s revenues are expected to perform worse than the wider market. There was also a nice increase in the price target, with analysts feeling that the intrinsic value of the business is improving.
Still, the long-term prospects of the business are much more relevant than next year’s earnings. At least one analyst has provided forecasts out to 2021, which can be seen for free on our platform here.
You can also see whether Schweitzer-Mauduit International is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
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