Earnings Miss: Ternium S.A. Missed EPS And Analysts Are Revising Their Forecasts

Last week, you might have seen that Ternium S.A. (NYSE:TX) released its quarterly result to the market. The early response was not positive, with shares down 3.6% to US$34.68 in the past week. Revenues came in at US$4.5b, in line with estimates, while Ternium reported a statutory loss of US$3.71 per share, well short of prior analyst forecasts for a profit. 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.

Check out our latest analysis for Ternium

Taking into account the latest results, the current consensus, from the nine analysts covering Ternium, is for revenues of US$18.6b in 2024. This implies a noticeable 4.2% reduction in Ternium's revenue over the past 12 months. Ternium is also expected to turn profitable, with statutory earnings of US$9.95 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$18.6b and earnings per share (EPS) of US$7.62 in 2024. Although the revenue estimates have not really changed, we can see there's been a sizeable expansion in earnings per share expectations, suggesting that the analysts have become more bullish after the latest result.

There's been no major changes to the consensus price target of US$49.27, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. 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. There are some variant perceptions on Ternium, with the most bullish analyst valuing it at US$57.00 and the most bearish at US$41.00 per share. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 8.3% by the end of 2024. This indicates a significant reduction from annual growth of 15% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 5.2% per year. It's pretty clear that Ternium's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Ternium's earnings potential next year. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. The consensus price target held steady at US$49.27, with the latest estimates not enough to have an impact on their price targets.

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 estimates - from multiple Ternium analysts - going out to 2026, and you can see them free on our platform here.

Even so, be aware that Ternium is showing 1 warning sign in our investment analysis , you should know about...

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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.

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