O2Micro International Limited (NASDAQ:OIIM) just released its latest quarterly results and things are looking bullish. Results overall were solid, with revenues arriving 2.8% better than analyst forecasts at US$16m. Higher revenues also resulted in substantially lower statutory losses which, at US$0.06 per share, were 2.8% smaller than the analysts expected. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Following the latest results, O2Micro International's twin analysts are now forecasting revenues of US$68.2m in 2020. This would be a reasonable 6.9% improvement in sales compared to the last 12 months. Losses are expected to hold steady at around US$0.10. Before this earnings announcement, the analysts had been modelling revenues of US$64.1m and losses of US$0.24 per share in 2020. So it seems there's been a definite increase in optimism about O2Micro International's future following the latest consensus numbers, with a the loss per share forecasts in particular.
Despite these upgrades,the analysts have not made any major changes to their price target of US$10.14, implying that their latest estimates don't have a long term impact on what they think the stock is worth.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's clear from the latest estimates that O2Micro International's rate of growth is expected to accelerate meaningfully, with the forecast 6.9% revenue growth noticeably faster than its historical growth of 2.3%p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to see revenue growth of 9.1% next year. It seems obvious that, while the future growth outlook is brighter than the recent past, O2Micro International is expected to grow slower than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. They also upgraded their revenue estimates for next year, even though sales are expected to grow slower than the wider industry. 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.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have analyst estimates for O2Micro International going out as far as 2021, and you can see them free on our platform here.
Before you take the next step you should know about the 3 warning signs for O2Micro International that we have uncovered.
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