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The quarterly results for Fuel Tech, Inc. (NASDAQ:FTEK) were released last week, making it a good time to revisit its performance. Revenues fell badly short of expectations, with sales of US$3.8m being some 21% below what the analyst had forecast. Statutory losses were in line with forecasts, with Fuel Tech losing US$0.10 a share. This is an important time for investors, as they can track a company's performance in its report, look at what expert is forecasting for next year, and see if there has been any change to expectations for the business. We thought readers would find it interesting to see the analyst latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the current consensus from Fuel Tech's one analyst is for revenues of US$26.2m in 2020, which would reflect a notable 8.8% increase on its sales over the past 12 months. Per-share statutory losses are expected to explode, reaching US$0.18 per share. Yet prior to the latest earnings, the analyst had been anticipated revenues of US$27.2m and earnings per share (EPS) of US$0.06 in 2020. There looks to have been a significant drop in sentiment regarding Fuel Tech's prospects after these latest results, with a small dip in revenues and the analyst now forecasting a loss instead of a profit.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. One thing stands out from these estimates, which is that Fuel Tech is forecast to grow faster in the future than it has in the past, with revenues expected to grow 8.8%. If achieved, this would be a much better result than the 15% annual decline over the past five years. Compare this against analyst estimates for the wider industry, which suggest that (in aggregate) industry revenues are expected to grow 4.0% next year. So it looks like Fuel Tech is expected to grow faster than its competitors, at least for a while.
The Bottom Line
The biggest low-light for us was that the forecasts for Fuel Tech dropped from profits to a loss next year. They also downgraded their revenue estimates, although industry data suggests that Fuel Tech's revenues are expected to grow faster than the wider industry. We previously had no consensus price target, which could suggest the business has reached a point where the analyst feels comfortably deriving a valuation for it.
With that in mind, we wouldn't be too quick to come to a conclusion on Fuel Tech. Long-term earnings power is much more important than next year's profits. At least one analyst has provided forecasts out to 2020, which can be seen for free on our platform here.
And what about risks? Every company has them, and we've spotted 3 warning signs for Fuel Tech you should know about.
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