Earnings Update: Here's Why Analysts Just Lifted Their The Timken Company (NYSE:TKR) Price Target To US$97.18

It's been a pretty great week for The Timken Company (NYSE:TKR) shareholders, with its shares surging 14% to US$106 in the week since its latest annual results. Timken reported in line with analyst predictions, delivering revenues of US$4.6b and statutory earnings per share of US$4.11, suggesting the business is executing well and in line with its plan. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.

Taking into account the latest results, the consensus forecast from Timken's twelve analysts is for revenues of US$4.73b in 2026. This reflects a reasonable 3.3% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to soar 24% to US$5.12. Before this earnings report, the analysts had been forecasting revenues of US$4.70b and earnings per share (EPS) of US$5.38 in 2026. The analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share numbers for next year.

View our latest analysis for Timken

Despite cutting their earnings forecasts,the analysts have lifted their price target 5.6% to US$97.18, suggesting that these impacts are not expected to weigh on the stock's value in the long term. 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. There are some variant perceptions on Timken, with the most bullish analyst valuing it at US$115 and the most bearish at US$83.00 per share. 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.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Timken's revenue growth is expected to slow, with the forecast 3.3% annualised growth rate until the end of 2026 being well below the historical 4.1% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 6.0% annually. Factoring in the forecast slowdown in growth, it seems obvious that Timken is also expected to grow slower than other industry participants.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Timken. 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 also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

With that in mind, we wouldn't be too quick to come to a conclusion on Timken. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Timken analysts - going out to 2028, and you can see them free on our platform here.

You still need to take note of risks, for example - Timken has 2 warning signs we think you should be aware of.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.