Franklin Electric Co., Inc. (NASDAQ:FELE) shares fell 2.5% to US$59.29 in the week since its latest annual results. Revenues of US$1.3b were in line with forecasts, although statutory earnings per share (EPS) came in below expectations at US$2.03, missing estimates by 5.1%. This is an important time for investors, as they can track a company's performance in its report, look at what top analysts are forecasting for next year, and see if there has been any change to expectations for the business. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether analysts have changed their mind on Franklin Electric after the latest results.
Taking into account the latest results, the most recent consensus for Franklin Electric from five analysts is for revenues of US$1.36b in 2020, which is a modest 3.5% increase on its sales over the past 12 months. Statutory earnings per share are expected to swell 13% to US$2.30. Before this earnings report, analysts had been forecasting revenues of US$1.37b and earnings per share (EPS) of US$2.42 in 2020. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but analysts did make a small dip in their earnings per share forecasts.
It might be a surprise to learn that the consensus price target was broadly unchanged at US$52.00, with analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Franklin Electric, with the most bullish analyst valuing it at US$56.00 and the most bearish at US$47.00 per share. Still, with such a tight range of estimates, it suggests analysts have a pretty good idea of what they think the company is worth.
It can be useful to take a broader overview by seeing how analyst forecasts compare, both to the Franklin Electric's past performance and to peers in the same market. We would highlight that Franklin Electric's revenue growth is expected to slow, with forecast 3.5% increase next year well below the historical 7.8%p.a. growth over the last five years. By way of comparison, other companies in this market with analyst coverage, are forecast to grow their revenue at 1.5% next year. So it's pretty clear that, while Franklin Electric's revenue growth is expected to slow, it's still expected to grow faster than the market itself.
The Bottom Line
The most important thing to take away is that analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Happily, there were no major changes to revenue forecasts, with analysts still expecting the business to grow faster than the wider market. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
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 Franklin Electric analysts - going out to 2021, and you can see them free on our platform here.
You can also view our analysis of Franklin Electric's balance sheet, and whether we think Franklin Electric is carrying too much debt, for free on our platform here.
If you spot an error that warrants correction, please contact the editor at email@example.com. 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. Simply Wall St has no position in the stocks mentioned.
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