The latest analyst coverage could presage a bad day for TransAct Technologies Incorporated (NASDAQ:TACT), with the analysts 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 analysts seeing grey clouds on the horizon.
Following the latest downgrade, the current consensus, from the dual analysts covering TransAct Technologies, is for revenues of US$46m in 2024, which would reflect a stressful 24% reduction in TransAct Technologies' sales over the past 12 months. After this downgrade, the company is anticipated to report a loss of US$0.43 in 2024, a sharp decline from a profit over the last year. However, before this estimates update, the consensus had been expecting revenues of US$54m and US$0.23 per share in losses. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a serious cut to their revenue forecasts while also expecting losses per share to increase.
The consensus price target fell 29% to US$6.75, implicitly signalling that lower earnings per share are a leading indicator for TransAct Technologies' valuation.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the TransAct Technologies' past performance and to peers in the same industry. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 31% by the end of 2024. This indicates a significant reduction from annual growth of 12% 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 6.0% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - TransAct Technologies is expected to lag the wider industry.
The Bottom Line
The most important thing to take away is that analysts increased their loss per share estimates for this year. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of TransAct Technologies.
So things certainly aren't looking great, and you should also know that we've spotted some potential warning signs with TransAct Technologies, including its declining profit margins. For more information, you can click here to discover this and the 3 other concerns we've identified.
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