Shareholders in Worthington Industries, Inc. (NYSE:WOR) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. The revenue forecast for next year has experienced a facelift, with the analysts now much more optimistic on its sales pipeline. Investor sentiment seems to be improving too, with the share price up 9.1% to US$57.63 over the past 7 days. Could this big upgrade push the stock even higher?
Following the upgrade, the consensus from three analysts covering Worthington Industries is for revenues of US$4.2b in 2023, implying an uneasy 11% decline in sales compared to the last 12 months. Prior to the latest estimates, the analysts were forecasting revenues of US$3.7b in 2023. It looks like there's been a clear increase in optimism around Worthington Industries, given the decent improvement in revenue forecasts.
Notably, the analysts have cut their price target 13% to US$55.00, suggesting concerns around Worthington Industries' valuation.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Worthington Industries' past performance and to peers in the same industry. We would highlight that sales are expected to reverse, with a forecast 9.3% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 2.5% 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 2.0% annually for the foreseeable future. It's pretty clear that Worthington Industries' revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The highlight for us was that analysts increased their revenue forecasts for Worthington Industries next year. They're also anticipating slower revenue growth than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by recent business developments, leading to a lower estimate of Worthington Industries' future valuation. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at Worthington Industries.
These earnings upgrades look like a sterling endorsement, but before diving in - you should know that we've spotted 5 potential flags with Worthington Industries, including its declining profit margins. You can learn more, and discover the 2 other flags we've identified, for free on our platform here.
Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.
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.