It's shaping up to be a tough period for LSI Industries Inc. (NASDAQ:LYTS), which a week ago released some disappointing second-quarter results that could have a notable impact on how the market views the stock. LSI Industries missed earnings this time around, with US$82m revenue coming in 8.5% below what analysts had modelled. Statutory earnings per share (EPS) of US$0.07 also fell short of expectations by 12%. Following the result, analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether analysts have changed their mind on LSI Industries after the latest results.
Following last week's earnings report, LSI Industries's one analyst are forecasting 2020 revenues to be US$323.6m, approximately in line with the last 12 months. Statutory earnings per share are expected to shoot up 67% to US$0.25. In the lead-up to this report, analysts had been modelling revenues of US$339.2m and earnings per share (EPS) of US$0.38 in 2020. From this we can that analyst sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a pretty serious reduction to earnings per share estimates.
The average price target climbed 13% to US$9.00 despite the reduced earnings forecasts, suggesting that this earnings impact could be a positive for the stock, once it passes.
Another way to assess these estimates is by comparing them to past performance, and seeing whether analysts are more or less bullish relative to other companies in the market. We would highlight that sales are expected to reverse, with the forecast 0.6% revenue decline a notable change from historical growth of 1.8% over the last five years. Compare this with our data, which suggests that other companies in the same market are, in aggregate, expected to see their revenue grow 2.7% next year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - analysts also expect LSI Industries to grow slower than the wider market.
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 LSI Industries. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider market. There was also a nice increase in the price target, with analysts feeling that the intrinsic value of the business is improving.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At least one analyst has provided forecasts out to 2021, which can be seen for free on our platform here.
You can also see whether LSI Industries is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
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