It's shaping up to be a tough period for Trex Company, Inc. (NYSE:TREX), which a week ago released some disappointing quarterly results that could have a notable impact on how the market views the stock. Trex Company missed earnings this time around, with US$285m revenue coming in 5.4% below what the analysts had modelled. Statutory earnings per share (EPS) of US$0.48 also fell short of expectations by 14%. 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, Trex Company's 20 analysts are now forecasting revenues of US$1.22b in 2026. This would be an okay 3.5% improvement in revenue compared to the last 12 months. Statutory per share are forecast to be US$1.86, approximately in line with the last 12 months. In the lead-up to this report, the analysts had been modelling revenues of US$1.32b and earnings per share (EPS) of US$2.50 in 2026. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a large cut to earnings per share estimates.

The consensus price target fell 31% to US$47.53, with the weaker earnings outlook clearly leading valuation estimates. 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. Currently, the most bullish analyst values Trex Company at US$70.00 per share, while the most bearish prices it at US$32.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

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. It's pretty clear that there is an expectation that Trex Company's revenue growth will slow down substantially, with revenues to the end of 2026 expected to display 2.8% growth on an annualised basis. This is compared to a historical growth rate of 3.5% over the past 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 the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

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 Trex Company going out to 2027, and you can see them free on our platform here..

It might also be worth considering whether Trex Company's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.

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.