Trex Company, Inc. (NYSE:TREX) shareholders are probably feeling a little disappointed, since its shares fell 5.0% to US$87.38 in the week after its latest first-quarter results. It looks like a credible result overall - although revenues of US$374m were in line with what the analysts predicted, Trex Company surprised by delivering a statutory profit of US$0.82 per share, a notable 13% above expectations. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Taking into account the latest results, Trex Company's 18 analysts currently expect revenues in 2024 to be US$1.24b, approximately in line with the last 12 months. Statutory earnings per share are expected to dip 4.3% to US$2.23 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$1.24b and earnings per share (EPS) of US$2.21 in 2024. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
There were no changes to revenue or earnings estimates or the price target of US$102, suggesting that the company has met expectations in its recent result. 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 Trex Company analyst has a price target of US$120 per share, while the most pessimistic values it at US$75.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Trex Company shareholders.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that Trex Company's revenue growth is expected to slow, with the forecast 1.2% annualised growth rate until the end of 2024 being well below the historical 11% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 5.2% per year. Factoring in the forecast slowdown in growth, it seems obvious that Trex Company is also expected to grow slower than other industry participants.
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. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse 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.
With that in mind, we wouldn't be too quick to come to a conclusion on Trex Company. Long-term earnings power is much more important than next year's profits. We have forecasts for Trex Company going out to 2026, and you can see them free on our platform here.
It is also worth noting that we have found 1 warning sign for Trex Company that you need to take into consideration.
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