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Vontier Corporation (NYSE:VNT) investors will be delighted, with the company turning in some strong numbers with its latest results. The company beat expectations with revenues of US$707m arriving 5.4% ahead of forecasts. Statutory earnings per share (EPS) were US$0.54, 5.9% ahead of estimates. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Taking into account the latest results, Vontier's six analysts currently expect revenues in 2021 to be US$2.83b, approximately in line with the last 12 months. Statutory earnings per share are forecast to fall 10% to US$2.34 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$2.75b and earnings per share (EPS) of US$2.26 in 2021. It looks like there's been a modest increase in sentiment following the latest results, withthe analysts becoming a bit more optimistic in their predictions for both revenues and earnings.
Despite these upgrades,the analysts have not made any major changes to their price target of US$41.35, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. 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 Vontier, with the most bullish analyst valuing it at US$44.00 and the most bearish at US$33.00 per share. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Vontier is an easy business to forecast or the the analysts are all using similar assumptions.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's pretty clear that there is an expectation that Vontier's revenue growth will slow down substantially, with revenues to the end of 2021 expected to display 1.2% growth on an annualised basis. This is compared to a historical growth rate of 3.2% over the past year. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 7.2% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Vontier.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Vontier following these results. They also upgraded their revenue estimates for next year, even though sales are expected to grow slower than the wider industry. The consensus price target held steady at US$41.35, with the latest estimates not enough to have an impact on their price targets.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Vontier 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 Vontier 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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