Shareholders in Encore Wire Corporation (NASDAQ:WIRE) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. The analysts greatly increased their revenue estimates, suggesting a stark improvement in business fundamentals.
After the upgrade, the two analysts covering Encore Wire are now predicting revenues of US$1.8b in 2021. If met, this would reflect a sizeable 30% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to jump 20% to US$5.79. Previously, the analysts had been modelling revenues of US$1.6b and earnings per share (EPS) of US$3.85 in 2021. So we can see there's been a pretty clear increase in analyst sentiment in recent times, with both revenues and earnings per share receiving a decent lift in the latest estimates.
View our latest analysis for Encore Wire
With these upgrades, we're not surprised to see that the analysts have lifted their price target 21% to US$90.50 per share. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Encore Wire at US$95.00 per share, while the most bearish prices it at US$86.00. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that the analysts have a clear view on its prospects.
Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that Encore Wire's rate of growth is expected to accelerate meaningfully, with the forecast 42% annualised revenue growth to the end of 2021 noticeably faster than its historical growth of 6.6% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 11% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Encore Wire is expected to grow much faster than its industry.
The Bottom Line
The most important thing to take away from this upgrade is that analysts upgraded their earnings per share estimates for this year, expecting improving business conditions. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. With a serious upgrade to expectations and a rising price target, it might be time to take another look at Encore Wire.
Analysts are clearly in love with Encore Wire at the moment, but before diving in - you should be aware that we've identified some warning flags with the business, such as concerns around earnings quality. For more information, you can click through to our platform to learn more about this and the 1 other flag we've identified .
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. 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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May 01, 2021 at 04:03PM
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Analysts Just Made A Captivating Upgrade To Their Encore Wire Corporation (NASDAQ:WIRE) Forecasts - Yahoo Finance
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