Exponent, Inc. (NASDAQ:EXPO) shareholders are probably feeling a little disappointed, since its shares fell 7.2% to US$69.59 in the week after its latest quarterly results. It looks like a credible result overall - although revenues of US$93m were in line with what the analysts predicted, Exponent surprised by delivering a statutory profit of US$0.34 per share, a notable 11% above expectations. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
After the latest results, the four analysts covering Exponent are now predicting revenues of US$422.9m in 2021. If met, this would reflect a meaningful 11% improvement in sales compared to the last 12 months. Per-share earnings are expected to climb 11% to US$1.68. In the lead-up to this report, the analysts had been modelling revenues of US$426.0m and earnings per share (EPS) of US$1.70 in 2021. 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.
The analysts reconfirmed their price target of US$87.00, showing that the business is executing well and in line with expectations. 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. The most optimistic Exponent analyst has a price target of US$99.00 per share, while the most pessimistic values it at US$73.00. This is a very narrow spread of estimates, implying either that Exponent is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
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 Exponent's rate of growth is expected to accelerate meaningfully, with the forecast 11% revenue growth noticeably faster than its historical growth of 6.7%p.a. 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 7.8% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Exponent to grow faster than the wider industry.
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. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. The consensus price target held steady at US$87.00, with the latest estimates not enough to have an impact on their price targets.
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. We have estimates - from multiple Exponent analysts - going out to 2023, and you can see them free on our platform here.
And what about risks? Every company has them, and we've spotted 1 warning sign for Exponent you should know about.
This article by Simply Wall St is general in nature. 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.
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