Results: H.B. Fuller Company Beat Earnings Expectations And Analysts Now Have New Forecasts
H.B. Fuller Company (NYSE:FUL) defied analyst predictions to release its third-quarter results, which were ahead of market expectations. H.B. Fuller beat earnings, with revenues hitting US$691m, ahead of expectations, and statutory earnings per share outperforming analyst reckonings by a solid 12%. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. 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 H.B. Fuller
Taking into account the latest results, the current consensus from H.B. Fuller's seven analysts is for revenues of US$2.86b in 2021, which would reflect a reasonable 3.9% increase on its sales over the past 12 months. Per-share earnings are expected to surge 38% to US$3.07. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$2.86b and earnings per share (EPS) of US$3.13 in 2021. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
With the analysts reconfirming their revenue and earnings forecasts, it's surprising to see that the price target rose 8.2% to US$54.43. It looks as though they previously had some doubts over whether the business would live up to their expectations. 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. Currently, the most bullish analyst values H.B. Fuller at US$60.00 per share, while the most bearish prices it at US$46.00. This is a very narrow spread of estimates, implying either that H.B. Fuller 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 H.B. Fuller's past performance and to peers in the same industry. It's pretty clear that there is an expectation that H.B. Fuller's revenue growth will slow down substantially, with revenues next year expected to grow 3.9%, compared to a historical growth rate of 8.8% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 5.4% next 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 H.B. Fuller.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that H.B. Fuller's revenues are expected to perform worse than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for H.B. Fuller going out to 2024, and you can see them free on our platform here.
However, before you get too enthused, we've discovered 2 warning signs for H.B. Fuller (1 shouldn't be ignored!) that you should be aware of.
This article by Simply Wall St is general in nature. 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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