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There's been a major selloff in Fuel Tech, Inc. (NASDAQ:FTEK) shares in the week since it released its annual report, with the stock down 38% to US$0.47. Revenues of US$30m came in a modest 6.6% below forecasts. Statutory losses were a relative bright spot though, with a per-share loss of US$0.32 coming in a substantial 60% smaller than what analysts had expected. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Taking into account the latest results, the one analyst covering Fuel Tech provided consensus estimates of US$27.2m revenue in 2020, which would reflect an uneasy 11% decline on its sales over the past 12 months. Statutory losses are forecast to balloon 45% to US$0.18 per share. Yet prior to the latest earnings, analysts had been forecasting revenues of US$48.5m and earnings per share (EPS) of US$0.06 in 2020. So we can see that the consensus has become notably more bearish on Fuel Tech's outlook following these results, with a pretty serious reduction to next year's revenue estimates. Furthermore, they expect the business to be loss-making next year, compared to their previous forecasts of a profit.
In addition, we can look to Fuel Tech's past performance and see whether business is expected to improve, and if the company is expected to perform better than wider market. Over the past five years, revenues have declined around 13% annually. On the bright side, analysts expect the decline to level off somewhat, with the forecast for a 11% decline in revenue next year. Compare this against analyst estimates for companies in the wider market, which suggest that revenues (in aggregate) are expected to decline 5.3% next year. So while it's not great to see that analysts are expecting a decline, at least Fuel Tech is forecast to shrink at a slower rate than the wider market.
The Bottom Line
The most important thing to take away is that analysts are expecting Fuel Tech to become unprofitable next year. Unfortunately, analysts also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider market. Even so, earnings per share are more important to the intrinsic value of the business. We previously had no consensus price target, which could suggest the business has reached a point where analysts feel comfortably deriving a valuation for it.
Still, the long-term prospects of the business are much more relevant than next year's earnings. We have analyst estimates for Fuel Tech going out as far as 2020, and you can see them free on our platform here.
We also provide an overview of the Fuel Tech Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, 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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