Yahoo Finance Results: Ashland Inc. Exceeded Expectations And The Consensus Has Updated Its Estimates
As you might know, Ashland Inc. (NYSE:ASH) recently reported its second-quarter numbers. It looks like a credible result overall - although revenues of US$575m were what the analysts expected, Ashland surprised by delivering a (statutory) profit of US$2.39 per share, an impressive 169% above what was forecast. Following the result, the analysts have 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
View our latest analysis for Ashland
Taking into account the latest results, the current consensus from Ashland's ten analysts is for revenues of US$2.19b in 2024. This would reflect a satisfactory 3.5% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to step up 17% to US$4.26. In the lead-up to this report, the analysts had been modelling revenues of US$2.19b and earnings per share (EPS) of US$3.30 in 2024. There was no real change to the revenue estimates, but the analysts do seem more bullish on earnings, given the sizeable expansion in earnings per share expectations following these results.
There's been no major changes to the consensus price target of US$109, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Ashland, with the most bullish analyst valuing it at US$126 and the most bearish at US$90.00 per share. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. For example, we noticed that Ashland's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 7.1% growth to the end of 2024 on an annualised basis. That is well above its historical decline of 1.1% a year over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 4.8% annually. So it looks like Ashland is expected to grow faster than its competitors, at least for a while.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Ashland following these results. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
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. At Simply Wall St, we have a full range of analyst estimates for Ashland going out to 2026, and you can see them free on our platform here..
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 2 warning signs with Ashland , and understanding them should be part of your investment process.
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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.
