Yahoo Finance Silicon Laboratories Inc. Just Missed Earnings And Its EPS Looked Sad - But Analysts Have Updated Their Models
There's been a notable change in appetite for Silicon Laboratories Inc. (NASDAQ:SLAB) shares in the week since its full-year report, with the stock down 18% to US$98.31. It looks like a pretty bad result, all things considered. Although revenues of US$838m were in line with analyst predictions, statutory earnings fell badly short, missing estimates by 28% to hit US$0.43 per share. Earnings are an important time for investors, as they can track a company's performance, look at what top 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 analysts have changed their earnings models, following these results.
See our latest analysis for Silicon Laboratories
Taking into account the latest results, the current consensus from Silicon Laboratories's nine analysts is for revenues of US$908.3m in 2020, which would reflect a decent 8.4% increase on its sales over the past 12 months. Statutory earnings per share are expected to leap 195% to US$1.31. Before this earnings report, analysts had been forecasting revenues of US$918.5m and earnings per share (EPS) of US$1.48 in 2020. So there's definitely been a decline in analyst sentiment after the latest results, noting the substantial drop in new EPS forecasts.
It might be a surprise to learn that the consensus price target was broadly unchanged at US$123, with analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. 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 Silicon Laboratories at US$131 per share, while the most bearish prices it at US$108. Still, with such a tight range of estimates, it suggests analysts have a pretty good idea of what they think the company is worth.
Zooming out to look at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up both against past performance, and against industry growth estimates. Next year brings more of the same, according to analysts, with revenue forecast to grow 8.4%, in line with its 7.4% annual growth over the past five years. Compare this with the wider market, which analyst estimates (in aggregate) suggest will see revenues grow 8.3% next year. So although Silicon Laboratories is expected to maintain its revenue growth rate, it's only growing at about the rate of the wider market.
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 Silicon Laboratories. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall market. The consensus price target held steady at US$123, with the latest estimates not enough to have an impact on analysts' estimated valuations.
With that in mind, we wouldn't be too quick to come to a conclusion on Silicon Laboratories. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Silicon Laboratories going out to 2021, and you can see them free on our platform here..
Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months 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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