Earnings Update: Here's Why Analysts Just Lifted Their Franklin Electric Co., Inc. (NASDAQ:FELE) Price Target To US$108

Franklin Electric Co., Inc. (NASDAQ:FELE) defied analyst predictions to release its second-quarter results, which were ahead of market expectations. Results were good overall, with revenues beating analyst predictions by 3.6% to hit US$587m. Statutory earnings per share (EPS) came in at US$1.31, some 2.3% above whatthe analysts had expected. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

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Taking into account the latest results, the most recent consensus for Franklin Electric from five analysts is for revenues of US$2.12b in 2025. If met, it would imply a modest 2.8% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to increase 6.0% to US$4.16. Before this earnings report, the analysts had been forecasting revenues of US$2.10b and earnings per share (EPS) of US$4.10 in 2025. 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.

Check out our latest analysis for Franklin Electric

With the analysts reconfirming their revenue and earnings forecasts, it's surprising to see that the price target rose 11% to US$108. It looks as though they previously had some doubts over whether the business would live up to their expectations. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Franklin Electric, with the most bullish analyst valuing it at US$120 and the most bearish at US$90.00 per share. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Franklin Electric is an easy business to forecast or the the analysts are all using similar assumptions.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's pretty clear that there is an expectation that Franklin Electric's revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 5.7% growth on an annualised basis. This is compared to a historical growth rate of 10% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 4.2% annually. So it's pretty clear that, while Franklin Electric's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

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. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

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 Franklin Electric going out to 2026, and you can see them free on our platform here.

You still need to take note of risks, for example - Franklin Electric has 1 warning sign 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.