Frequency Electronics, Inc. Just Missed Earnings - But Analysts Have Updated Their Models

The investors in Frequency Electronics, Inc.'s (NASDAQ:FEIM) will be rubbing their hands together with glee today, after the share price leapt 23% to US$43.00 in the week following its second-quarter results. It looks like a pretty bad result, all things considered. Although revenues of US$17m were in line with analyst predictions, statutory earnings fell badly short, missing estimates by 32% to hit US$0.18 per share. This is an important time for investors, as they can track a company's performance in its report, look at what experts are 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 estimates to see what could be in store for next year.

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Following the latest results, Frequency Electronics' two analysts are now forecasting revenues of US$72.2m in 2026. This would be an okay 3.4% improvement in revenue compared to the last 12 months. Statutory earnings per share are expected to dive 59% to US$0.88 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$68.3m and earnings per share (EPS) of US$0.98 in 2026. So it's pretty clear the analysts have mixed opinions on Frequency Electronics after the latest results; even though they upped their revenue numbers, it came at the cost of a substantial drop in per-share earnings expectations.

See our latest analysis for Frequency Electronics

Curiously, the consensus price target rose 16% to US$44.00. We can only conclude that the forecast revenue growth is expected to offset the impact of the expected fall in earnings.

Of course, another way to look at these forecasts is to place them into context against the industry itself. The period to the end of 2026 brings more of the same, according to the analysts, with revenue forecast to display 6.9% growth on an annualised basis. That is in line with its 7.4% annual growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 10.0% per year. So it's pretty clear that Frequency Electronics is expected to grow slower than similar companies in the same industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, they also upgraded their revenue estimates, although our data indicates it is expected to perform worse than the wider industry. There was also a nice increase in the price target, with the analysts 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 2028, which can be seen for free on our platform here.

However, before you get too enthused, we've discovered 2 warning signs for Frequency Electronics (1 doesn't sit too well with us!) 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.