There's been a notable change in appetite for Richardson Electronics, Ltd. (NASDAQ:RELL) shares in the week since its quarterly report, with the stock down 18% to US$10.40. It looks like a pretty bad result, given that revenues fell 15% short of analyst estimates at US$44m, and the company reported a statutory loss of US$0.13 per share instead of the profit that the analyst had been forecasting. Following the result, the analyst has 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. With this in mind, we've gathered the latest statutory forecasts to see what the analyst is expecting for next year.
Check out our latest analysis for Richardson Electronics
After the latest results, the consensus from Richardson Electronics' lone analyst is for revenues of US$215.2m in 2024, which would reflect a measurable 4.7% decline in revenue compared to the last year of performance. Statutory earnings per share are forecast to dive 74% to US$0.18 in the same period. Before this earnings report, the analyst had been forecasting revenues of US$239.6m and earnings per share (EPS) of US$0.31 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.
The consensus price target fell 62% to US$10.00, with the weaker earnings outlook clearly leading valuation estimates.
Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 9.3% by the end of 2024. This indicates a significant reduction from annual growth of 11% 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 5.2% per year. It's pretty clear that Richardson Electronics' revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most important thing to take away is that the analyst downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. 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 fell measurably, with the analyst seemingly not reassured by the latest results, leading to a lower estimate of Richardson Electronics' future valuation.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have analyst estimates for Richardson Electronics going out as far as 2025, and you can see them free on our platform here.
Plus, you should also learn about the 2 warning signs we've spotted with Richardson Electronics .
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