PDF Solutions, Inc. Just Recorded A 14% EPS Beat: Here's What Analysts Are Forecasting Next

It's been a good week for PDF Solutions, Inc. (NASDAQ:PDFS) shareholders, because the company has just released its latest full-year results, and the shares gained 3.9% to US$35.07. Revenues were US$166m, approximately in line with expectations, although statutory earnings per share (EPS) performed substantially better. EPS of US$0.08 were also better than expected, beating analyst predictions by 14%. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

See our latest analysis for PDF Solutions

Taking into account the latest results, the current consensus from PDF Solutions' four analysts is for revenues of US$183.2m in 2024. This would reflect a solid 10% increase on its revenue over the past 12 months. Per-share earnings are expected to bounce 282% to US$0.31. In the lead-up to this report, the analysts had been modelling revenues of US$196.8m and earnings per share (EPS) of US$0.42 in 2024. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a pretty serious reduction to earnings per share estimates.

The consensus price target fell 6.1% to US$42.25, with the weaker earnings outlook clearly leading valuation estimates. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values PDF Solutions at US$45.00 per share, while the most bearish prices it at US$40.00. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.

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 PDF Solutions' revenue growth is expected to slow, with the forecast 10% annualised growth rate until the end of 2024 being well below the historical 17% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 17% per year. Factoring in the forecast slowdown in growth, it seems obvious that PDF Solutions is also expected to grow slower than other industry participants.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for PDF Solutions. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of PDF Solutions' future valuation.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for PDF Solutions going out to 2025, and you can see them free on our platform here..

It is also worth noting that we have found 3 warning signs for PDF Solutions that you need to take into consideration.

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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.