There's been a notable change in appetite for Exponent, Inc. (NASDAQ:EXPO) shares in the week since its yearly report, with the stock down 12% to US$78.39. Results were roughly in line with estimates, with revenues of US$497m and statutory earnings per share of US$1.94. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Taking into account the latest results, Exponent's three analysts currently expect revenues in 2024 to be US$506.1m, approximately in line with the last 12 months. Statutory earnings per share are expected to descend 11% to US$1.77 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$541.5m and earnings per share (EPS) of US$2.16 in 2024. The analysts seem less optimistic after the recent results, reducing their revenue forecasts and making a substantial drop in earnings per share numbers.
The consensus price target fell 7.5% to US$93.00, with the weaker earnings outlook clearly leading valuation estimates. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Exponent analyst has a price target of US$95.00 per share, while the most pessimistic values it at US$91.00. This is a very narrow spread of estimates, implying either that Exponent is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that Exponent's revenue growth is expected to slow, with the forecast 1.8% annualised growth rate until the end of 2024 being well below the historical 7.0% 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 6.4% annually. Factoring in the forecast slowdown in growth, it seems obvious that Exponent is also expected to grow slower than other industry participants.
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. 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 analysts seemingly not reassured by the latest results, leading to a lower estimate of Exponent's future valuation.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Exponent going out to 2025, and you can see them free on our platform here.
You can also see our analysis of Exponent's Board and CEO remuneration and experience, and whether company insiders have been buying stock.
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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.