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

The investors in Resideo Technologies, Inc.'s (NYSE:REZI) will be rubbing their hands together with glee today, after the share price leapt 28% to US$22.17 in the week following its full-year results. The result was positive overall - although revenues of US$6.2b were in line with what the analysts predicted, Resideo Technologies surprised by delivering a statutory profit of US$1.42 per share, modestly greater than expected. 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.

See our latest analysis for Resideo Technologies

Taking into account the latest results, Resideo Technologies' five analysts currently expect revenues in 2024 to be US$6.17b, approximately in line with the last 12 months. Per-share earnings are expected to grow 18% to US$1.71. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$6.28b and earnings per share (EPS) of US$1.66 in 2024. So the consensus seems to have become somewhat more optimistic on Resideo Technologies' earnings potential following these results.

The analysts have been lifting their price targets on the back of the earnings upgrade, with the consensus price target rising 17% to US$22.67. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Resideo Technologies, with the most bullish analyst valuing it at US$22.00 and the most bearish at US$19.00 per share. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that revenue is expected to reverse, with a forecast 1.2% annualised decline to the end of 2024. That is a notable change from historical growth of 6.9% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 5.1% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Resideo Technologies 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 Resideo Technologies' 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 Resideo Technologies' revenue is expected to perform worse 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.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Resideo Technologies going out to 2026, and you can see them free on our platform here..

Don't forget that there may still be risks. For instance, we've identified 2 warning signs for Resideo Technologies that 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.