Eltek Ltd. Just Missed Earnings - But Analysts Have Updated Their Models

One of the biggest stories of last week was how Eltek Ltd. (NASDAQ:ELTK) shares plunged 24% in the week since its latest full-year results, closing yesterday at US$10.42. Revenues of US$47m were in line with forecasts, although statutory earnings per share (EPS) came in below expectations at US$1.07, missing estimates by 7.8%. This is an important time for investors, as they can track a company's performance in its report, look at what expert is forecasting for next year, and see if there has been any change to expectations for the business. So we collected the latest post-earnings statutory consensus estimate to see what could be in store for next year.

Check out our latest analysis for Eltek

Taking into account the latest results, the most recent consensus for Eltek from lone analyst is for revenues of US$50.8m in 2024. If met, it would imply a decent 8.8% increase on its revenue over the past 12 months. Per-share earnings are expected to swell 18% to US$1.12. In the lead-up to this report, the analyst had been modelling revenues of US$52.3m and earnings per share (EPS) of US$1.24 in 2024. The analyst are less bullish than they were before these results, given the reduced revenue forecasts and the minor downgrade to earnings per share expectations.

What's most unexpected is that the consensus price target rose 15% to US$15.00, strongly implying the downgrade to forecasts is not expected to be more than a temporary blip.

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. The analyst is definitely expecting Eltek's growth to accelerate, with the forecast 8.8% annualised growth to the end of 2024 ranking favourably alongside historical growth of 5.7% per annum 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 5.4% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Eltek is expected to grow much faster than its industry.

The Bottom Line

The biggest concern is that the analyst reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Eltek. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. There was also a nice increase in the price target, with the analyst clearly feeling that the intrinsic value of the business is improving.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At least one analyst has provided forecasts out to 2025, which can be seen for free on our platform here.

You should always think about risks though. Case in point, we've spotted 4 warning signs for Eltek 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.