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As you might know, Lumentum Holdings Inc. (NASDAQ:LITE) just kicked off its latest first-quarter results with some very strong numbers. Results were good overall, with revenues beating analyst predictions by 2.5% to hit US$452m. Statutory earnings per share (EPS) came in at US$0.86, some 4.6% above whatthe analysts had expected. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. 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 current consensus from Lumentum Holdings' 14 analysts is for revenues of US$1.77b in 2021, which would reflect a credible 5.5% increase on its sales over the past 12 months. Per-share earnings are expected to bounce 44% to US$2.96. Before this earnings report, the analysts had been forecasting revenues of US$1.76b and earnings per share (EPS) of US$3.00 in 2021. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
It will come as no surprise then, to learn that the consensus price target is largely unchanged at US$104. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Lumentum Holdings analyst has a price target of US$120 per share, while the most pessimistic values it at US$90.00. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's pretty clear that there is an expectation that Lumentum Holdings' revenue growth will slow down substantially, with revenues next year expected to grow 5.5%, compared to a historical growth rate of 16% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 3.2% next year. So it's pretty clear that, while Lumentum Holdings' revenue growth is expected to slow, it's still expected to grow faster than the industry itself.
The Bottom Line
The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. The consensus price target held steady at US$104, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn't be too quick to come to a conclusion on Lumentum Holdings. Long-term earnings power is much more important than next year's profits. We have forecasts for Lumentum Holdings going out to 2023, and you can see them free on our platform here.
Plus, you should also learn about the 2 warning signs we've spotted with Lumentum Holdings .
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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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