Yahoo Finance Gentherm Incorporated Analysts Are Pretty Bullish On The Stock After Recent Results
The yearly results for Gentherm Incorporated (NASDAQ:THRM) were released last week, making it a good time to revisit its performance. The result was positive overall - although revenues of US$972m were in line with what analysts predicted, Gentherm surprised by delivering a statutory profit of US$1.13 per share, modestly greater than expected. Following the result, 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. We thought readers would find it interesting to see analysts' latest (statutory) post-earnings forecasts for next year.
See our latest analysis for Gentherm
Following last week's earnings report, Gentherm's seven analysts are forecasting 2020 revenues to be US$975.9m, approximately in line with the last 12 months. Statutory earnings per share are expected to surge 101% to US$2.28. Yet prior to the latest earnings, analysts had been forecasting revenues of US$1.01b and earnings per share (EPS) of US$2.35 in 2020. It's pretty clear that analyst sentiment has fallen after the latest results, leading to lower revenue forecasts and a small dip in earnings per share estimates.
The average price target climbed 7.6% to US$52.07 despite the reduced earnings forecasts, suggesting that this earnings impact could be a positive for the stock, once it passes. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Gentherm at US$57.50 per share, while the most bearish prices it at US$45.00. Still, with such a tight range of estimates, it suggests analysts have a pretty good idea of what they think the company is worth.
It can be useful to take a broader overview by seeing how analyst forecasts compare, both to the Gentherm's past performance and to peers in the same market. It's pretty clear that analysts expect Gentherm's revenue growth will slow down substantially, with revenues next year expected to grow 0.4%, compared to a historical growth rate of 4.9% over the past five years. By way of comparison, other companies in this market with analyst coverage, are forecast to grow their revenue at 4.5% per year. So it's pretty clear that, while revenue growth is expected to slow down, analysts still expect the wider market to grow faster than Gentherm.
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 Gentherm. 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. There was also a nice increase in the price target, with analysts feeling that the intrinsic value of the business is improving.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Gentherm going out to 2021, and you can see them free on our platform here.
It might also be worth considering whether Gentherm'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.
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