Allied Motion Technologies Inc. (NASDAQ:AMOT) defied analyst predictions to release its third-quarter results, which were ahead of market expectations. It was overall a positive result, with revenues beating expectations by 5.2% to hit US$95m. Allied Motion Technologies also reported a statutory profit of US$0.42, which was an impressive 57% above what 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.
After the latest results, the three analysts covering Allied Motion Technologies are now predicting revenues of US$391.2m in 2021. If met, this would reflect a notable 8.2% improvement in sales compared to the last 12 months. Per-share earnings are expected to step up 13% to US$1.72. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$390.0m and earnings per share (EPS) of US$1.73 in 2021. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
The consensus price target rose 9.8% to US$48.67despite there being no meaningful change to earnings estimates. It could be that the analystsare reflecting the predictability of Allied Motion Technologies' earnings by assigning a price premium. 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. The most optimistic Allied Motion Technologies analyst has a price target of US$51.00 per share, while the most pessimistic values it at US$46.00. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Allied Motion Technologies is an easy business to forecast or the the analysts are all using similar assumptions.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that Allied Motion Technologies' revenue growth is expected to slow, with forecast 8.2% increase next year well below the historical 11%p.a. growth over the last five years. Compare this to the 125 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 7.4% per year. So it's pretty clear that, while Allied Motion Technologies' revenue growth is expected to slow, it's expected to grow roughly in line with the industry.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall industry. There was also a nice increase in the price target, with the analysts 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. We have forecasts for Allied Motion Technologies going out to 2021, and you can see them free on our platform here.
Even so, be aware that Allied Motion Technologies is showing 1 warning sign in our investment analysis , you should know about...
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