FGI Industries Ltd. (NASDAQ:FGI) Analysts Just Slashed Next Year's Revenue Estimates By 19%

Today is shaping up negative for FGI Industries Ltd. (NASDAQ:FGI) shareholders, with the analysts delivering a substantial negative revision to next year's forecasts. Revenue estimates were cut sharply as analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.

After the downgrade, the consensus from FGI Industries' twin analysts is for revenues of US$155m in 2023, which would reflect an uneasy 15% decline in sales compared to the last year of performance. Statutory earnings per share are anticipated to decrease 4.1% to US$0.41 in the same period. Prior to this update, the analysts had been forecasting revenues of US$190m and earnings per share (EPS) of US$0.44 in 2023. Indeed, we can see that analyst sentiment has declined measurably after the new consensus came out, with a measurable cut to revenue estimates and a small dip in EPS estimates to boot.

Check out our latest analysis for FGI Industries

The consensus price target fell 17% to US$5.00, with the weaker earnings outlook clearly leading analyst valuation estimates.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the FGI Industries' past performance and to peers in the same industry. We would highlight that sales are expected to reverse, with a forecast 12% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 17% over the last three years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 4.4% annually for the foreseeable future. It's pretty clear that FGI Industries' revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by recent business developments, leading to a lower estimate of FGI Industries' future valuation. Given the stark change in sentiment, we'd understand if investors became more cautious on FGI Industries after today.

After a downgrade like this, it's pretty clear that previous forecasts were too optimistic. What's more, we've spotted several possible issues with FGI Industries' business, like concerns around earnings quality. For more information, you can click here to discover this and the 3 other warning signs we've identified.

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