It's been a good week for Advanced Energy Industries, Inc. (NASDAQ:AEIS) shareholders, because the company has just released its latest third-quarter results, and the shares gained 3.4% to US$65.76. Earnings per share disappointed, coming in -22% short of expectations, at US$0.20. Fortunately revenue performance was a lot stronger, with revenues of US$175m arriving 14% ahead of predictions. Following the result, 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. With this in mind, we've gathered the latest forecasts to see what analysts are expecting for next year.
After the latest results, the five analysts covering Advanced Energy Industries are now predicting revenues of US$1.26b in 2020. If met, this would reflect a sizeable 108% improvement in sales compared to the last 12 months. Earnings per share are expected to surge 44% to US$2.46. In the lead-up to this report, analysts had been modelling revenues of US$1.20b and earnings per share (EPS) of US$2.49 in 2020. There doesn't appear to have been a major change in analyst sentiment following the results, other than the slight bump in revenue estimates.
It may not be a surprise to see that analysts have reconfirmed their price target of US$66.43, implying that the uplift in sales is not expected to greatly contribute to Advanced Energy Industries's valuation in the near term. The consensus price target just an average of individual analyst targets, so - considering that the price target changed, it would be handy to see how wide the range of underlying estimates is. The most optimistic Advanced Energy Industries analyst has a price target of US$78.00 per share, while the most pessimistic values it at US$50.00. This shows there is still quite a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
Another way to assess these estimates is by comparing them to past performance, and seeing whether analysts are more or less bullish relative to other companies in the market. Analysts are definitely expecting Advanced Energy Industries's growth to accelerate, with the forecast 108% growth ranking favourably alongside historical growth of 15% per annum over the past five years. Compare this with other companies in the same market, which are forecast to grow their revenue 7.2% next year. It seems obvious that, while the growth outlook is brighter than the recent past, analysts also expect Advanced Energy Industries to grow faster than the wider market.
The Bottom Line
The most obvious conclusion from these results is that there's been no major change in the business' prospects in recent times, with analysts holding earnings per share steady, in line with previous estimates. Fortunately, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider market. The consensus price target held steady at US$66.43, with the latest estimates not enough to have an impact on analysts' estimated valuations.
Still, the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Advanced Energy Industries going out to 2021, and you can see them free on our platform here.
You can also see whether Advanced Energy Industries is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
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