There's been a notable change in appetite for Itron, Inc. (NASDAQ:ITRI) shares in the week since its full-year report, with the stock down 12% to US$76.98. The result was positive overall - although revenues of US$2.5b were in line with what analysts predicted, Itron surprised by delivering a statutory profit of US$1.23 per share, modestly greater than 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. With this in mind, we've gathered the latest statutory forecasts to see what analysts are expecting for next year.
Following last week's earnings report, Itron's seven analysts are forecasting 2020 revenues to be US$2.54b, approximately in line with the last 12 months. Statutory earnings per share are expected to surge 100% to US$2.47. In the lead-up to this report, analysts had been modelling revenues of US$2.54b and earnings per share (EPS) of US$2.57 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 minor downgrade to their earnings per share forecasts.
The consensus price target held steady at US$92.22, with analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. The consensus price target just an average of individual analyst targets, so - considering that the price target changed, it would be handy to see how wide the range of underlying estimates is. The most optimistic Itron analyst has a price target of US$97.00 per share, while the most pessimistic values it at US$86.00. Still, with such a tight range of estimates, it suggests analysts have a pretty good idea of what they think the company is worth.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that Itron's revenue growth is expected to slow, with forecast 1.5% increase next year well below the historical 6.1%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 5.2% per 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 Itron.
The Bottom Line
The biggest concern with the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Itron. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Itron's revenues are expected to perform worse 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.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have forecasts for Itron going out to 2021, and you can see them free on our platform here.
It might also be worth considering whether Itron's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
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