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ESCO Technologies Inc. (NYSE:ESE) defied analyst predictions to release its first-quarter results, which were ahead of market expectations. It was overall a positive result, with revenues beating expectations by 2.9% to hit US$172m. ESCO Technologies also reported a statutory profit of US$3.32, which was an impressive 741% above what analysts had forecast. 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 statutory forecasts to see what analysts are expecting for next year.
Taking into account the latest results, the two analysts covering ESCO Technologies provided consensus estimates of US$786.5m revenue in 2020, which would reflect a noticeable 4.2% decline on its sales over the past 12 months. Statutory earnings per share are expected to ascend 13% to US$3.25. Before this earnings report, analysts had been forecasting revenues of US$793.5m and earnings per share (EPS) of US$3.23 in 2020. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
With analysts reconfirming their revenue and earnings forecasts, it's surprising to see that the price target rose 15% to US$106. It looks as though analysts previously had some doubts over whether the business would live up to their expectations.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. These estimates imply that sales are expected to slow, with a forecast revenue decline of 4.2% a significant reduction from annual growth of 11% over the last five years. Compare this with our data, which suggests that other companies in the same market are, in aggregate, expected to see their revenue grow 1.6% next year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - analysts also expect ESCO Technologies to grow slower than the wider market.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. On the plus side, there were no major changes to revenue estimates; although analyst forecasts imply revenues will perform worse than the wider market. There was also a nice increase in the price target, with analysts feeling that the intrinsic value of the business is improving.
Still, the long-term prospects of the business are much more relevant than next year's earnings. We have analyst estimates for ESCO Technologies going out as far as 2021, and you can see them free on our platform here.
It might also be worth considering whether ESCO Technologies's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
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