Results: Tennant Company Exceeded Expectations And The Consensus Has Updated Its Estimates

It's been a good week for Tennant Company (NYSE:TNC) shareholders, because the company has just released its latest third-quarter results, and the shares gained 6.3% to US$70.86. Revenues of US$322m fell slightly short of expectations, but earnings were a definite bright spot, with statutory per-share profits of US$1.12 an impressive 46% ahead of estimates. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

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Taking into account the latest results, the current consensus from Tennant's four analysts is for revenues of US$1.36b in 2027. This would reflect a decent 10% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to bounce 250% to US$4.71. Before this earnings report, the analysts had been forecasting revenues of US$1.36b and earnings per share (EPS) of US$4.71 in 2027. 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.

See our latest analysis for Tennant

There were no changes to revenue or earnings estimates or the price target of US$87.75, suggesting that the company has met expectations in its recent result. 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. The most optimistic Tennant analyst has a price target of US$93.00 per share, while the most pessimistic values it at US$77.00. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.

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 clear from the latest estimates that Tennant's rate of growth is expected to accelerate meaningfully, with the forecast 8.0% annualised revenue growth to the end of 2027 noticeably faster than its historical growth of 3.1% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 6.6% annually. Tennant is expected to grow at about the same rate as its industry, so it's not clear that we can draw any conclusions from its growth relative to competitors.

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. Happily, there were no real changes to revenue forecasts, with the business still expected to grow in line with the overall industry. The consensus price target held steady at US$87.75, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on Tennant. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Tennant 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 - Tennant has 3 warning signs (and 2 which are concerning) we think you should know about.

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