Yahoo Finance Knowles Corporation Just Missed EPS By 14%: Here's What Analysts Think Will Happen Next
It's been a sad week for Knowles Corporation (NYSE:KN), who've watched their investment drop 18% to US$16.15 in the week since the company reported its annual result. It was not a great result overall. While revenues of US$855m were in line with analyst predictions, earnings were less than expected, missing statutory estimates by 14% to hit US$0.53 per share. 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've gathered the most recent statutory forecasts to see whether analysts have changed their earnings models, following these results.
View our latest analysis for Knowles
Taking into account the latest results, the most recent consensus for Knowles from nine analysts is for revenues of US$874.4m in 2020, which is a reasonable 2.3% increase on its sales over the past 12 months. Statutory earnings per share are expected to leap 44% to US$0.79. In the lead-up to this report, analysts had been modelling revenues of US$905.8m and earnings per share (EPS) of US$0.92 in 2020. Analysts seem less optimistic after the recent results, reducing their sales forecasts and making a real cut to earnings per share forecasts.
The consensus price target fell 7.2% to US$21.56, with the weaker earnings outlook clearly leading analyst valuation estimates. The consensus price target just an average of individual analyst targets, so - considering that the price target changed, it would be handy to see how wide the range of underlying estimates is. The most optimistic Knowles analyst has a price target of US$28.00 per share, while the most pessimistic values it at US$17.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Knowles shareholders.
It can be useful to take a broader overview by seeing how analyst forecasts compare, both to the Knowles's past performance and to peers in the same market. For example, we noticed that Knowles's rate of growth is expected to accelerate meaningfully, with revenues forecast to grow at 2.3%, well above its historical decline of 2.8% a year over the past five years. Compare this against analyst estimates for the wider market, which suggest that (in aggregate) market revenues are expected to grow 5.2% next year. So although Knowles's revenue growth is expected to improve, it is still expected to grow slower than the market.
The Bottom Line
The most important thing to take away is that analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. 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. Analysts also downgraded their price target, suggesting that the latest news has led analysts to become more pessimistic about the intrinsic value of the business.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for Knowles going out to 2021, and you can see them free on our platform here..
You can also see whether Knowles is carrying too much debt, and whether its balance sheet is healthy, for free on our 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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