It's been a mediocre week for Tennant Company (NYSE:TNC) shareholders, with the stock dropping 12% to US$73.89 in the week since its latest second-quarter results. It looks like a pretty bad result, all things considered. Although revenues of US$324m were in line with analyst predictions, statutory earnings fell badly short, missing estimates by 62% to hit US$0.44 per share. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

Following the latest results, Tennant's four analysts are now forecasting revenues of US$1.28b in 2026. This would be a credible 5.3% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to jump 153% to US$2.71. Before this earnings report, the analysts had been forecasting revenues of US$1.27b and earnings per share (EPS) of US$3.66 in 2026. The analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a pretty serious reduction to EPS estimates.

It might be a surprise to learn that the consensus price target fell 6.1% to US$87.75, with the analysts clearly linking lower forecast earnings to the performance of the stock price. 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. Currently, the most bullish analyst values Tennant at US$93.00 per share, while the most bearish prices it at US$77.00. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Tennant is an easy business to forecast or the the analysts are all using similar assumptions.

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. The analysts are definitely expecting Tennant's growth to accelerate, with the forecast 11% annualised growth to the end of 2026 ranking favourably alongside historical growth of 3.4% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 6.9% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Tennant is expected to grow much faster than its industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Tennant. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Tennant's future valuation.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Tennant going out to 2028, and you can see them free on our platform here.

You should always think about risks though.

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.