Results: Advanced Energy Industries, Inc. Exceeded Expectations And The Consensus Has Updated Its Estimates
Advanced Energy Industries, Inc. (NASDAQ:AEIS) shareholders are probably feeling a little disappointed, since its shares fell 4.8% to US$101 in the week after its latest full-year results. Advanced Energy Industries reported US$1.7b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$3.40 beat expectations, being 5.9% higher than what 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.
See our latest analysis for Advanced Energy Industries
Taking into account the latest results, the current consensus, from the nine analysts covering Advanced Energy Industries, is for revenues of US$1.50b in 2024. This implies an uncomfortable 9.3% reduction in Advanced Energy Industries' revenue over the past 12 months. Statutory earnings per share are expected to tumble 35% to US$2.29 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$1.71b and earnings per share (EPS) of US$3.79 in 2024. It looks like sentiment has declined substantially in the aftermath of these results, with a substantial drop in revenue estimates and a large cut to earnings per share numbers as well.
Despite the cuts to forecast earnings, there was no real change to the US$108 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Advanced Energy Industries analyst has a price target of US$130 per share, while the most pessimistic values it at US$95.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Advanced Energy Industries shareholders.
Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that revenue is expected to reverse, with a forecast 9.3% annualised decline to the end of 2024. That is a notable change from historical growth of 20% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 5.3% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Advanced Energy Industries is expected to lag the wider industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Advanced Energy Industries. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. The consensus price target held steady at US$108, with the latest estimates not enough to have an impact on their price targets.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Advanced Energy Industries analysts - going out to 2025, and you can see them free on our platform here.
Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
