Shareholders of American Shipping Company ASA (OB:AMSC) will be pleased this week, given that the stock price is up 11% to kr24.90 following its latest first-quarter results. Statutory earnings per share fell badly short of expectations, coming in at US$0.03, some 50% below analyst forecasts, although revenues were okay, approximately in line with analyst estimates at US$22m. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
See our latest analysis for American Shipping
Following last week's earnings report, American Shipping's dual analysts are forecasting 2020 revenues to be US$88.0m, approximately in line with the last 12 months. Per-share earnings are expected to accumulate 7.7% to US$0.16. In the lead-up to this report, the analysts had been modelling revenues of US$93.2m and earnings per share (EPS) of US$0.36 in 2020. The analysts seem less optimistic after the recent results, reducing their sales forecasts and making a pretty serious reduction to earnings per share numbers.
The consensus price target fell 15% to US$3.69, with the weaker earnings outlook clearly leading valuation estimates.
Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that sales are expected to reverse, with the forecast 0.1% revenue decline a notable change from historical growth of 0.0007% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 12% annually for the foreseeable future. It's pretty clear that American Shipping's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for American Shipping. Unfortunately, they also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of American Shipping's future valuation.
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 least one analyst has provided forecasts out to 2022, which can be seen for free on our platform here.
You should always think about risks though. Case in point, we've spotted 3 warning signs for American Shipping you should be aware of, and 2 of them are a bit concerning.
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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. Thank you for reading.