Earnings Beat: LSI Industries Inc. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models

Investors in LSI Industries Inc. (NASDAQ:LYTS) had a good week, as its shares rose 3.8% to close at US$14.08 following the release of its second-quarter results. Revenues were US$109m, approximately in line with whatthe analysts expected, although statutory earnings per share (EPS) crushed expectations, coming in at US$0.20, an impressive 111% ahead of estimates. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

Check out our latest analysis for LSI Industries

After the latest results, the consensus from LSI Industries' three analysts is for revenues of US$460.1m in 2024, which would reflect a discernible 2.9% decline in revenue compared to the last year of performance. Statutory earnings per share are forecast to sink 11% to US$0.83 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$468.4m and earnings per share (EPS) of US$0.73 in 2024. Although the revenue estimates have not really changed, we can see there's been a solid gain to earnings per share expectations, suggesting that the analysts have become more bullish after the latest result.

There's been no major changes to the consensus price target of US$19.33, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on LSI Industries, with the most bullish analyst valuing it at US$21.00 and the most bearish at US$17.00 per share. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.

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. We would highlight that revenue is expected to reverse, with a forecast 5.6% annualised decline to the end of 2024. That is a notable change from historical growth of 11% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 7.7% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - LSI Industries is expected to lag the wider industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around LSI Industries' earnings potential next year. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that LSI Industries' revenue is expected to perform worse than the wider industry. The consensus price target held steady at US$19.33, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on LSI Industries. Long-term earnings power is much more important than next year's profits. We have forecasts for LSI Industries going out to 2026, and you can see them free on our platform here.

You should always think about risks though. Case in point, we've spotted 1 warning sign for LSI Industries 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.