Earnings Miss: Diodes Incorporated Missed EPS By 45% And Analysts Are Revising Their Forecasts

Shareholders might have noticed that Diodes Incorporated (NASDAQ:DIOD) filed its second-quarter result this time last week. The early response was not positive, with shares down 3.1% to US$64.68 in the past week. It looks like a pretty bad result, all things considered. Although revenues of US$320m were in line with analyst predictions, statutory earnings fell badly short, missing estimates by 45% to hit US$0.17 per share. 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 Diodes after the latest results.

Check out our latest analysis for Diodes

Following the recent earnings report, the consensus from five analysts covering Diodes is for revenues of US$1.32b in 2024. This implies a noticeable 2.3% decline in revenue compared to the last 12 months. Statutory earnings per share are expected to tumble 37% to US$1.32 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$1.32b and earnings per share (EPS) of US$1.62 in 2024. So there's definitely been a decline in sentiment after the latest results, noting the substantial drop in new EPS forecasts.

The consensus price target held steady at US$77.25, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. 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. The most optimistic Diodes analyst has a price target of US$85.00 per share, while the most pessimistic values it at US$69.00. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Diodes' past performance and to peers in the same industry. We would highlight that revenue is expected to reverse, with a forecast 4.5% annualised decline to the end of 2024. That is a notable change from historical growth of 8.3% 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 18% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Diodes is expected to lag the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Diodes. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. The consensus price target held steady at US$77.25, 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. At Simply Wall St, we have a full range of analyst estimates for Diodes going out to 2025, and you can see them free on our platform here..

However, before you get too enthused, we've discovered 2 warning signs for Diodes 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.