Littelfuse, Inc. (NASDAQ:LFUS) shares fell 6.8% to US$177 in the week since its latest yearly results. It looks like the results were a bit of a negative overall. While revenues of US$1.5b were in line with analyst predictions, statutory earnings were less than expected, missing estimates by 2.6% to hit US$5.60 per share. 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. We thought readers would find it interesting to see analysts' latest (statutory) post-earnings forecasts for next year.
Following last week's earnings report, Littelfuse's ten analysts are forecasting 2020 revenues to be US$1.52b, approximately in line with the last 12 months. Statutory earnings per share are expected to swell 13% to US$6.39. Yet prior to the latest earnings, analysts had been forecasting revenues of US$1.49b and earnings per share (EPS) of US$6.56 in 2020. So it's pretty clear consensus is mixed on Littelfuse after the latest results; while analysts lifted revenue numbers, they also administered a minor downgrade to per-share earnings expectations.
The consensus price target was unchanged at US$199, suggesting the business is performing roughly in line with expectations, despite some adjustments to profit and revenue forecasts. 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 Littelfuse at US$219 per share, while the most bearish prices it at US$170. Still, with such a tight range of estimates, it suggests analysts have a pretty good idea of what they think the company is worth.
Zooming out to look at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up both against past performance, and against industry growth estimates. It's pretty clear that analysts expect Littelfuse's revenue growth will slow down substantially, with revenues next year expected to grow 1.3%, compared to a historical growth rate of 16% over the past five years. By way of comparison, other companies in this market with analyst coverage, are forecast to grow their revenue at 5.2% per year. Factoring in the forecast slowdown in growth, it seems obvious that analysts still expect Littelfuse to grow slower than the wider market.
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. They also upgraded their revenue estimates for next year, even though sales are expected to grow slower 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 in mind, we wouldn't be too quick to come to a conclusion on Littelfuse. Long-term earnings power is much more important than next year's profits. We have forecasts for Littelfuse going out to 2022, and you can see them free on our platform here.
You can also view our analysis of Littelfuse's balance sheet, and whether we think Littelfuse is carrying too much debt, for free on our platform here.
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