Trex Company, Inc. Just Reported And Analysts Have Been Lifting Their Price Targets

Investors in Trex Company, Inc. (NYSE:TREX) had a good week, as its shares rose 2.0% to close at US$104 following the release of its annual results. The result was positive overall - although revenues of US$745m were in line with what analysts predicted, Trex Company surprised by delivering a statutory profit of US$2.47 per share, modestly greater than expected. Earnings are an important time for investors, as they can track a company's performance, look at what top analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We thought readers would find it interesting to see analysts' latest (statutory) post-earnings forecasts for next year.

Check out our latest analysis for Trex Company

Taking into account the latest results, the current consensus from Trex Company's nine analysts is for revenues of US$849.6m in 2020, which would reflect a decent 14% increase on its sales over the past 12 months. Statutory earnings per share are expected to ascend 19% to US$2.94. Yet prior to the latest earnings, analysts had been forecasting revenues of US$848.0m and earnings per share (EPS) of US$2.93 in 2020. So it's pretty clear that, although analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.

The consensus price target rose 6.7% to US$97.94 despite there being no meaningful change to earnings estimates. It could be that analysts are reflecting the predictability of Trex Company's earnings by assigning a price premium. 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 Trex Company at US$115 per share, while the most bearish prices it at US$76.50. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We can infer from the latest estimates that analysts are expecting a continuation of Trex Company's historical trends, as next year's forecast 14% revenue growth is roughly in line with 13% annual revenue growth over the past five years. Compare this with the wider market, which analyst estimates (in aggregate) suggest will see revenues grow 4.1% next year. So although Trex Company is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider market.

The Bottom Line

The most obvious conclusion from these results is that there's been no major change in the business' prospects in recent times, with analysts holding earnings per share steady, in line with previous estimates. Happily, there were no major changes to revenue forecasts, with analysts still expecting the business to grow faster than the wider market. Analysts also upgraded their price target, suggesting that analysts believe the intrinsic value of the business is likely to improve over time.

Still, 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 Trex Company going out to 2024, and you can see them free on our platform here..

You can also see our analysis of Trex Company's Board and CEO remuneration and experience, and whether company insiders have been buying stock.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.