FormFactor, Inc. (NASDAQ:FORM) last week reported its latest full-year results, which makes it a good time for investors to dive in and see if the business is performing in line with expectations. The result was positive overall - although revenues of US$589m were in line with what analysts predicted, FormFactor surprised by delivering a statutory profit of US$0.51 per share, modestly greater than expected. Earnings are an important time for investors, as they can track a company's performance, look at what top analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. 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 latest consensus from FormFactor's seven analysts is for revenues of US$622.2m in 2020, which would reflect a credible 5.5% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to shoot up 28% to US$0.67. Yet prior to the latest earnings, analysts had been forecasting revenues of US$610.2m and earnings per share (EPS) of US$0.67 in 2020. So it's pretty clear that, although analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
With analysts reconfirming their revenue and earnings forecasts, it's surprising to see that the price target rose 6.0% to US$28.38. It looks as though analysts previously had some doubts over whether the business would live up to their expectations. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values FormFactor at US$32.00 per share, while the most bearish prices it at US$25.00. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that analysts have a clear view on its prospects.
Further, we can compare these estimates to past performance, and see how FormFactor forecasts compare to the wider market's forecast performance. It's pretty clear that analysts expect FormFactor's revenue growth will slow down substantially, with revenues next year expected to grow 5.5%, compared to a historical growth rate of 17% over the past five years. Compare this against other companies (with analyst forecasts) in the market, which are in aggregate expected to see revenue growth of 8.8% next year. So it's pretty clear that, while revenue growth is expected to slow down, analysts still expect the wider market to grow faster than FormFactor.
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. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that FormFactor's revenues are expected to 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.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for FormFactor going out to 2021, and you can see them free on our platform here.
Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.
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