Here's What Analysts Are Forecasting For Franklin Electric Co., Inc. (NASDAQ:FELE) After Its Second-Quarter Results

It's shaping up to be a tough period for Franklin Electric Co., Inc. (NASDAQ:FELE), which a week ago released some disappointing second-quarter results that could have a notable impact on how the market views the stock. Results look to have been somewhat negative - revenue fell 4.8% short of analyst estimates at US$543m, and statutory earnings of US$1.26 per share missed forecasts by 4.4%. The 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Franklin Electric after the latest results.

Check out our latest analysis for Franklin Electric

Taking into account the latest results, the current consensus from Franklin Electric's four analysts is for revenues of US$2.07b in 2024. This would reflect a credible 2.6% increase on its revenue over the past 12 months. Per-share earnings are expected to rise 2.1% to US$4.16. Before this earnings report, the analysts had been forecasting revenues of US$2.11b and earnings per share (EPS) of US$4.27 in 2024. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a minor downgrade to their earnings per share forecasts.

The consensus price target held steady at US$106, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. 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. The most optimistic Franklin Electric analyst has a price target of US$120 per share, while the most pessimistic values it at US$90.00. This is a very narrow spread of estimates, implying either that Franklin Electric is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Franklin Electric's past performance and to peers in the same industry. 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 2024 expected to display 5.4% growth on an annualised basis. This is compared to a historical growth rate of 13% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 3.5% per year. 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 biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Franklin Electric. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

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.

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with Franklin Electric , and understanding this should be part of your investment process.

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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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com