Results: Strattec Security Corporation Exceeded Expectations And The Consensus Has Updated Its Estimates

Strattec Security Corporation (NASDAQ:STRT) defied analyst predictions to release its second-quarter results, which were ahead of market expectations. It was overall a positive result, with revenues beating expectations by 7.1% to hit US$127m. Strattec Security also reported a statutory profit of US$1.85, which was an impressive 52% above what the analyst had forecast. This is an important time for investors, as they can track a company's performance in its report, look at what expert is forecasting for next year, and see if there has been any change to expectations for the business. So we collected the latest post-earnings statutory consensus estimate to see what could be in store for next year.

View our latest analysis for Strattec Security

Following the latest results, Strattec Security's lone analyst are now forecasting revenues of US$499.9m in 2021. This would be a sizeable 21% improvement in sales compared to the last 12 months. Per-share earnings are expected to jump 235% to US$6.77. In the lead-up to this report, the analyst had been modelling revenues of US$479.7m and earnings per share (EPS) of US$5.16 in 2021. So it seems there's been a definite increase in optimism about Strattec Security's future following the latest results, with a sizeable expansion in the earnings per share forecasts in particular.

It will come as no surprise to learn that the analyst has increased their price target for Strattec Security 26% to US$67.00on the back of these upgrades.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. The analyst is definitely expecting Strattec Security's growth to accelerate, with the forecast 21% growth ranking favourably alongside historical growth of 2.4% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 17% next year. Strattec Security is expected to grow at about the same rate as its industry, so it's not clear that we can draw any conclusions from its growth relative to competitors.

The Bottom Line

The most important thing here is that the analyst upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Strattec Security following these results. There was also an upgrade to revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider industry. There was also a nice increase in the price target, with the analyst clearly feeling that the intrinsic value of the business is improving.

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. At least one analyst has provided forecasts out to 2022, which can be seen for free on our platform here.

Even so, be aware that Strattec Security is showing 2 warning signs in our investment analysis , you should know about...

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