Shoals Technologies Group, Inc. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Predictions

A week ago, Shoals Technologies Group, Inc. (NASDAQ:SHLS) came out with a strong set of second-quarter numbers that could potentially lead to a re-rate of the stock. The company beat forecasts, with revenue of US$111m, some 5.9% above estimates, and statutory earnings per share (EPS) coming in at US$0.08, 30% ahead of expectations. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Shoals Technologies Group after the latest results.

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Taking into account the latest results, the current consensus from Shoals Technologies Group's 19 analysts is for revenues of US$458.1m in 2025. This would reflect a meaningful 14% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to leap 131% to US$0.29. In the lead-up to this report, the analysts had been modelling revenues of US$436.5m and earnings per share (EPS) of US$0.27 in 2025. So there seems to have been a moderate uplift in sentiment following the latest results, given the upgrades to both revenue and earnings per share forecasts for next year.

View our latest analysis for Shoals Technologies Group

Althoughthe analysts have upgraded their earnings estimates, there was no change to the consensus price target of US$6.99, suggesting that the forecast performance does not have a long term impact on the company's valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Shoals Technologies Group at US$11.00 per share, while the most bearish prices it at US$4.00. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how analysts think this business will perform. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

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 clear from the latest estimates that Shoals Technologies Group's rate of growth is expected to accelerate meaningfully, with the forecast 31% annualised revenue growth to the end of 2025 noticeably faster than its historical growth of 21% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 9.3% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Shoals Technologies Group to grow faster than 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 Shoals Technologies Group's earnings potential next year. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. The consensus price target held steady at US$6.99, with the latest estimates not enough to have an impact on their price targets.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Shoals Technologies Group analysts - going out to 2027, 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 Shoals Technologies Group , and understanding it 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.