This Franklin Wireless Corp. (NASDAQ:FKWL) Analyst Is Way More Bearish Than They Used To Be

The latest analyst coverage could presage a bad day for Franklin Wireless Corp. (NASDAQ:FKWL), with the covering analyst making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analyst seeing grey clouds on the horizon.

Following the latest downgrade, the current consensus, from the single analyst covering Franklin Wireless, is for revenues of US$129m in 2022, which would reflect a stressful 39% reduction in Franklin Wireless' sales over the past 12 months. Statutory earnings per share are supposed to dive 73% to US$0.53 in the same period. Before this latest update, the analyst had been forecasting revenues of US$214m and earnings per share (EPS) of US$1.74 in 2022. It looks like analyst sentiment has declined substantially, with a pretty serious reduction to revenue estimates and a large cut to earnings per share numbers as well.

View our latest analysis for Franklin Wireless

It'll come as no surprise then, to learn that the analyst has cut their price target 43% to US$16.00.

Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 33% by the end of 2022. This indicates a significant reduction from annual growth of 26% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 4.0% annually for the foreseeable future. It's pretty clear that Franklin Wireless' revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing to take away is that the analyst cut their earnings per share estimates, expecting a clear decline in business conditions. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. Given the scope of the downgrades, it would not be a surprise to see the market become more wary of the business.

That said, this analyst might have good reason to be negative on Franklin Wireless, given dilutive stock issuance over the past year. Learn more, and discover the 2 other warning signs we've identified, for free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

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