Ternium S.A. Just Missed EPS By 21%: Here's What Analysts Think Will Happen Next

The quarterly results for Ternium S.A. (NYSE:TX) were released last week, making it a good time to revisit its performance. Statutory earnings per share fell badly short of expectations, coming in at US$0.34, some 21% below analyst forecasts, although revenues were okay, approximately in line with analyst estimates at US$3.9b. 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.

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After the latest results, the twelve analysts covering Ternium are now predicting revenues of US$17.2b in 2025. If met, this would reflect an okay 2.3% improvement in revenue compared to the last 12 months. Ternium is also expected to turn profitable, with statutory earnings of US$3.97 per share. Before this earnings report, the analysts had been forecasting revenues of US$17.3b and earnings per share (EPS) of US$4.07 in 2025. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a minor downgrade to their earnings per share forecasts.

See our latest analysis for Ternium

The consensus price target held steady at US$36.29, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Ternium, with the most bullish analyst valuing it at US$53.00 and the most bearish at US$25.00 per share. 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.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Ternium's past performance and to peers in the same industry. It's pretty clear that there is an expectation that Ternium's revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 3.1% growth on an annualised basis. This is compared to a historical growth rate of 14% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 4.6% 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 Ternium.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Ternium. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. 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 Ternium. Long-term earnings power is much more important than next year's profits. We have forecasts for Ternium going out to 2027, and you can see them free on our platform here.

It is also worth noting that we have found 1 warning sign for Ternium that you need to take into consideration.

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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.