Luxfer Holdings PLC (NYSE:LXFR) last week reported its latest annual results, which makes it a good time for investors to dive in and see if the business is performing in line with expectations. It looks like a pretty bad result, all things considered. Although revenues of US$444m were in line with analyst predictions, statutory earnings fell badly short, missing estimates by 73% to hit US$0.11 per share. 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. With this in mind, we've gathered the latest statutory forecasts to see what analysts are expecting for next year.
Taking into account the latest results, the two analysts covering Luxfer Holdings provided consensus estimates of US$426.6m revenue in 2020, which would reflect a measurable 3.8% decline on its sales over the past 12 months. Statutory earnings per share are expected to jump 622% to US$0.82. In the lead-up to this report, analysts had been modelling revenues of US$429.7m and earnings per share (EPS) of US$1.18 in 2020. Analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a pretty serious reduction to EPS estimates.
The average analyst price target fell 11% to US$25.50, with reduced earnings forecasts clearly tied to a lower valuation estimate.
In addition, we can look to Luxfer Holdings's past performance and see whether business is expected to improve, and if the company is expected to perform better than wider market. One thing that stands out from these estimates is that, even though revenues are forecast to keep falling, the decline is expected to accelerate. Analysts have modelled a 3.8% decline next year, compared to a historical decline of 0.0009% per annum for the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the market are forecast to see their revenue decline 1.5% per year. So it looks like Luxfer Holdings is also expected to see its revenues decline at a faster rate 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. On the plus side, there were no major changes to revenue estimates; although analyst forecasts imply revenues will perform worse than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by the latest results, leading to a lower estimate of Luxfer Holdings's future valuation.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have analyst estimates for Luxfer Holdings going out as far as 2021, and you can see them free on our platform here.
You can also view our analysis of Luxfer Holdings's balance sheet, and whether we think Luxfer Holdings is carrying too much debt, for free on our platform here.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.