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As you might know, Flux Power Holdings, Inc. (NASDAQ:FLUX) just kicked off its latest quarterly results with some very strong numbers. Results clearly exceeded expectations, with a substantial revenue beat leading to smaller losses in what looks like a definite win for investors. Revenues were US$13m and the statutory loss per share was US$0.23, smaller than the analysts had forecast. Following the result, the 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Taking into account the latest results, the most recent consensus for Flux Power Holdings from four analysts is for revenues of US$56.7m in 2023 which, if met, would be a sizeable 60% increase on its sales over the past 12 months. Losses are predicted to fall substantially, shrinking 32% to US$0.71. Before this earnings announcement, the analysts had been modelling revenues of US$54.7m and losses of US$0.69 per share in 2023. Overall it looks as though the analysts were a bit mixed on the latest consensus updates. Although there was a nice uplift to revenue, the consensus also made a moderate increase in its losses per share forecasts.
Spiting the revenue upgrading, the average price target fell 30% to US$9.25, clearly signalling that higher forecast losses are a valuation concern. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Flux Power Holdings at US$15.00 per share, while the most bearish prices it at US$6.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
Of course, another way to look at these forecasts is to place them into context against the industry itself. The period to the end of 2023 brings more of the same, according to the analysts, with revenue forecast to display 46% growth on an annualised basis. That is in line with its 51% annual growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 11% per year. So it's pretty clear that Flux Power Holdings is forecast to grow substantially faster than its industry.
The Bottom Line
The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Flux Power Holdings. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster 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 Flux Power Holdings' future valuation.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Flux Power Holdings analysts - going out to 2024, and you can see them free on our platform here.
You still need to take note of risks, for example - Flux Power Holdings has 3 warning signs we think you should be aware of.
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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.