U.S. markets closed

Thermon Group Holdings, Inc. Just Missed Earnings And Its EPS Looked Sad - But Analysts Have Updated Their Models

Simply Wall St

Thermon Group Holdings, Inc. (NYSE:THR) missed earnings with its latest quarterly results, disappointing overly-optimistic analysts. Unfortunately, Thermon Group Holdings delivered a serious earnings miss. Revenues of US$100m were 15% below expectations, and statutory earnings per share of US$0.20 missed estimates by 46%. Earnings are an important time for investors, as they can track a company's performance, look at what top analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We thought readers would find it interesting to see analysts' latest (statutory) post-earnings forecasts for next year.

View our latest analysis for Thermon Group Holdings

NYSE:THR Past and Future Earnings, February 10th 2020

Taking into account the latest results, the current consensus, from the dual analysts covering Thermon Group Holdings, is for revenues of US$401.1m in 2021, which would reflect a discernible 2.0% reduction in Thermon Group Holdings's sales over the past 12 months. Statutory earnings per share are expected to jump 52% to US$1.01. Yet prior to the latest earnings, analysts had been forecasting revenues of US$444.2m and earnings per share (EPS) of US$1.23 in 2021. Analysts seem less optimistic after the recent results, reducing their sales forecasts and making a real cut to earnings per share forecasts.

The consensus price target fell 11% to US$25.00, with the weaker earnings outlook clearly leading analyst valuation estimates.

It can also be useful to step back and take a broader view of how analyst forecasts compare to Thermon Group Holdings's performance in recent years. We would highlight that sales are expected to reverse, with the forecast 2.0% revenue decline a notable change from historical growth of 8.6% over the last five years. Compare this with our data, which suggests that other companies in the same market are, in aggregate, expected to see their revenue grow 2.7% next year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - analysts also expect Thermon Group Holdings to grow slower than the wider market.

The Bottom Line

The biggest concern with the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Thermon Group Holdings. Unfortunately, analysts also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider market. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target fell measurably, with analysts seemingly not reassured by the latest results, leading to a lower estimate of Thermon Group Holdings's future valuation.

With that in mind, we wouldn't be too quick to come to a conclusion on Thermon Group Holdings. Long-term earnings power is much more important than next year's profits. At least one analyst has provided forecasts out to 2022, which can be seen for free on our platform here.

It might also be worth considering whether Thermon Group Holdings's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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.