There's been a notable change in appetite for Glatfelter Corporation (NYSE:GLT) shares in the week since its yearly report, with the stock down 15% to US$14.54. Statutory earnings per share fell badly short of expectations, coming in at US$0.15, some 78% below analyst forecasts, although revenues were okay, approximately in line with analyst estimates at US$1.1b. Following the result, the analyst has 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analyst has changed their mind on Glatfelter after the latest results.
Taking into account the latest results, the current consensus from Glatfelter's single analyst is for revenues of US$1.56b in 2022, which would reflect a sizeable 44% increase on its sales over the past 12 months. Statutory earnings per share are predicted to shoot up 264% to US$0.55. Before this earnings report, the analyst had been forecasting revenues of US$1.53b and earnings per share (EPS) of US$1.15 in 2022. So there's definitely been a decline in sentiment after the latest results, noting the large cut to new EPS forecasts.
It might be a surprise to learn that the consensus price target fell 5.3% to US$18.00, with the analyst clearly linking lower forecast earnings to the performance of the stock price.
Of course, another way to look at these forecasts is to place them into context against the industry itself. For example, we noticed that Glatfelter's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 44% growth to the end of 2022 on an annualised basis. That is well above its historical decline of 1.1% a year over the past five years. What's also interesting is that our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue decline 1.5% annually for the foreseeable future. So it's pretty clear that Glatfelter is expected to grow faster than the wider industry.
The Bottom Line
The biggest concern is that the analyst reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Glatfelter. Fortunately, they also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations. Their estimates also suggest that Glatfelter's revenues are expected to perform better than the wider industry. The consensus price target fell measurably, with the analyst seemingly not reassured by the latest results, leading to a lower estimate of Glatfelter's future valuation.
With that in mind, we wouldn't be too quick to come to a conclusion on Glatfelter. Long-term earnings power is much more important than next year's profits. At least one analyst has provided forecasts out to 2023, which can be seen for free on our platform here.
And what about risks? Every company has them, and we've spotted 5 warning signs for Glatfelter (of which 1 shouldn't be ignored!) you should know about.
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