Powell Industries, Inc. (NASDAQ:POWL) came out with its first-quarter results last week, and we wanted to see how the business is performing and what industry forecasters think of the company following this report. Things were not great overall, with a surprise (statutory) loss of US$0.03 per share on revenues of US$107m, even though the analysts had been expecting a profit. 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. NasdaqGS:POWL Earnings and Revenue Growth February 5th 2021
After the latest results, the consensus from Powell Industries' two analysts is for revenues of US$446.0m in 2021, which would reflect a not inconsiderable 9.1% decline in sales compared to the last year of performance. Statutory earnings per share are expected to nosedive 51% to US$0.57 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$457.7m and earnings per share (EPS) of US$0.88 in 2021. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a large cut to earnings per share estimates.
It'll come as no surprise then, to learn that the analysts have cut their price target 13% to US$27.00.
Of course, another way to look at these forecasts is to place them into context against the industry itself. One more thing stood out to us about these estimates, and it's the idea that Powell Industries'decline is expected to accelerate, with revenues forecast to fall 9.1% next year, topping off a historical decline of 2.1% a year over the past five years. Compare this against analyst estimates for companies in the wider industry, which suggest that revenues (in aggregate) are expected to grow 11% next year. So it's pretty clear that, while it does have declining revenues, the analysts also expect Powell Industries to suffer worse than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Unfortunately, they also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
With that in mind, we wouldn't be too quick to come to a conclusion on Powell Industries. Long-term earnings power is much more important than next year's profits. We have analyst estimates for Powell Industries going out as far as 2022, and you can see them free on our platform here.
Plus, you should also learn about the 1 warning sign we've spotted with Powell Industries .
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. 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.
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