Public Companies

Earnings Update: Here's Why Analysts Just Lifted Their Ball Corporation (NYSE:BLL) Price Target To US$95.73

A week ago, Ball Corporation (NYSE:BLL) came out with a strong set of quarterly numbers that could potentially lead to a re-rate of the stock. Results were good overall, with revenues beating analyst predictions by 2.7% to hit US$3.1b. Statutory earnings per share (EPS) came in at US$0.72, some 2.6% above whatthe analysts had expected. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

earnings-and-revenue-growth
NYSE:BLL Earnings and Revenue Growth November 8th 2020

Following the latest results, Ball's 14 analysts are now forecasting revenues of US$12.5b in 2021. This would be a notable 9.4% improvement in sales compared to the last 12 months. Per-share earnings are expected to shoot up 73% to US$2.76. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$12.2b and earnings per share (EPS) of US$2.81 in 2021. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.

With the analysts reconfirming their revenue and earnings forecasts, it's surprising to see that the price target rose 8.2% to US$95.73. It looks as though they previously had some doubts over whether the business would live up to their expectations. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Ball analyst has a price target of US$120 per share, while the most pessimistic values it at US$47.00. 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.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We can infer from the latest estimates that forecasts expect a continuation of Ball'shistorical trends, as next year's 9.4% revenue growth is roughly in line with 8.1% annual revenue growth over the past five years. Compare this with the wider industry, which analyst estimates (in aggregate) suggest will see revenues grow 4.5% next year. So it's pretty clear that Ball is forecast to grow substantially faster than its industry.

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, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Ball going out to 2024, and you can see them free on our platform here.

You still need to take note of risks, for example - Ball has 3 warning signs (and 1 which is a bit concerning) we think you should know about.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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