Results: Gentherm Incorporated Exceeded Expectations And The Consensus Has Updated Its Estimates
Shareholders of Gentherm Incorporated (NASDAQ:THRM) will be pleased this week, given that the stock price is up 11% to US$55.68 following its latest annual results. Gentherm reported US$1.5b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$1.22 beat expectations, being 8.4% higher than what the analysts expected. Following the result, the 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Check out our latest analysis for Gentherm
Taking into account the latest results, the consensus forecast from Gentherm's five analysts is for revenues of US$1.55b in 2024. This reflects an okay 5.4% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to jump 108% to US$2.66. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$1.56b and earnings per share (EPS) of US$2.54 in 2024. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.
The analysts have been lifting their price targets on the back of the earnings upgrade, with the consensus price target rising 9.8% to US$69.40. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Gentherm at US$85.00 per share, while the most bearish prices it at US$63.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that Gentherm's revenue growth is expected to slow, with the forecast 5.4% annualised growth rate until the end of 2024 being well below the historical 8.1% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 9.8% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Gentherm.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Gentherm's earnings potential next year. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider 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 said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Gentherm analysts - going out to 2025, and you can see them free on our platform here.
You should always think about risks though. Case in point, we've spotted 1 warning sign for Gentherm you should be aware of.
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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.
