RF Industries, Ltd. Just Beat Revenue Estimates By 9.1%
RF Industries, Ltd. (NASDAQ:RFIL) shareholders are probably feeling a little disappointed, since its shares fell 6.5% to US$6.35 in the week after its latest third-quarter results. It was a workmanlike result, with revenues of US$24m coming in 9.1% ahead of expectations, and statutory earnings per share of US$0.08, in line with analyst appraisals. 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. We've gathered the most recent statutory forecasts to see whether the analyst has changed their earnings models, following these results.
See our latest analysis for RF Industries
Taking into account the latest results, the consensus forecast from RF Industries' one analyst is for revenues of US$91.2m in 2023, which would reflect a notable 9.4% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to shoot up 130% to US$0.41. Yet prior to the latest earnings, the analyst had been anticipated revenues of US$87.6m and earnings per share (EPS) of US$0.37 in 2023. So it seems there's been a definite increase in optimism about RF Industries' future following the latest results, with a nice increase in the earnings per share forecasts in particular.
As a result, it might be a surprise to see thatthe analyst has cut their price target 10.0% to US$9.00, which could suggest the forecast improvement in performance is not expected to last.
Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that RF Industries' revenue growth is expected to slow, with the forecast 7.5% annualised growth rate until the end of 2023 being well below the historical 15% p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 6.7% annually. Factoring in the forecast slowdown in growth, it looks like RF Industries is forecast to grow at about the same rate as the wider industry.
The Bottom Line
The most important thing here is that the analyst upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards RF Industries following these results. They also upgraded their revenue forecasts, although the latest estimates suggest that RF Industries will grow in line with the overall industry. Furthermore, the analyst also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have analyst estimates for RF Industries going out as far as 2023, and you can see them free on our platform here.
It is also worth noting that we have found 2 warning signs for RF Industries 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.
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