Nova Measuring Instruments Ltd. (NASDAQ:NVMI) just released its latest quarterly results and things are looking bullish. It was overall a positive result, with revenues beating expectations by 7.3% to hit US$61m. Nova Measuring Instruments also reported a statutory profit of US$0.41, which was an impressive 43% above what the analysts had forecast. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Taking into account the latest results, the current consensus from Nova Measuring Instruments' four analysts is for revenues of US$249.9m in 2020, which would reflect a decent 9.0% increase on its sales over the past 12 months. Statutory earnings per share are predicted to accumulate 7.5% to US$1.51. In the lead-up to this report, the analysts had been modelling revenues of US$237.1m and earnings per share (EPS) of US$1.27 in 2020. There's been a pretty noticeable increase in sentiment, with the analysts upgrading revenues and making a decent improvement in earnings per share in particular.
With these upgrades, we're not surprised to see that the analysts have lifted their price target 7.7% to US$49.00 per share. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Nova Measuring Instruments analyst has a price target of US$50.00 per share, while the most pessimistic values it at US$48.00. 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.
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. It's pretty clear that there is an expectation that Nova Measuring Instruments' revenue growth will slow down substantially, with revenues next year expected to grow 9.0%, compared to a historical growth rate of 14% over the past five years. Compare this to the 129 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 9.1% per year. So it's pretty clear that, while Nova Measuring Instruments' revenue growth is expected to slow, it's expected to grow roughly in line with the industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Nova Measuring Instruments' earnings potential next year. They also upgraded their revenue forecasts, although the latest estimates suggest that Nova Measuring Instruments will grow in line with the overall industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
With that in mind, we wouldn't be too quick to come to a conclusion on Nova Measuring Instruments. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Nova Measuring Instruments going out to 2021, and you can see them free on our platform here..
Plus, you should also learn about the 2 warning signs we've spotted with Nova Measuring Instruments (including 1 which can't be ignored) .
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