Earnings Miss: Shoals Technologies Group, Inc. Missed EPS By 13% And Analysts Are Revising Their Forecasts
Last week, you might have seen that Shoals Technologies Group, Inc. (NASDAQ:SHLS) released its full-year result to the market. The early response was not positive, with shares down 8.8% to US$13.35 in the past week. It was not a great result overall. While revenues of US$489m were in line with analyst predictions, earnings were less than expected, missing statutory estimates by 13% to hit US$0.24 per share. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
View our latest analysis for Shoals Technologies Group
Taking into account the latest results, the consensus forecast from Shoals Technologies Group's 19 analysts is for revenues of US$508.6m in 2024. This reflects an okay 4.0% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to jump 91% to US$0.45. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$625.5m and earnings per share (EPS) of US$0.67 in 2024. Indeed, we can see that the analysts are a lot more bearish about Shoals Technologies Group's prospects following the latest results, administering a substantial drop in revenue estimates and slashing their EPS estimates to boot.
The consensus price target fell 20% to US$18.95, with the weaker earnings outlook clearly leading valuation estimates. 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. There are some variant perceptions on Shoals Technologies Group, with the most bullish analyst valuing it at US$26.00 and the most bearish at US$10.00 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's pretty clear that there is an expectation that Shoals Technologies Group's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 4.0% growth on an annualised basis. This is compared to a historical growth rate of 29% 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 7.8% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Shoals Technologies Group.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Shoals Technologies Group. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. 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.
With that in mind, we wouldn't be too quick to come to a conclusion on Shoals Technologies Group. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Shoals Technologies Group analysts - going out to 2026, 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 Shoals Technologies Group you should know about.
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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.
