Orion Energy Systems, Inc. (NASDAQ:OESX) missed earnings with its latest quarterly results, disappointing overly-optimistic forecasters. Earnings fell badly short of analyst estimates, with US$19m revenue falling -11% short, and statutory losses of US$0.11 per share being -16% greater than forecast. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
After the latest results, the twin analysts covering Orion Energy Systems are now predicting revenues of US$97.8m in 2025. If met, this would reflect a reasonable 6.7% improvement in revenue compared to the last 12 months. Per-share losses are predicted to creep up to US$0.26. Before this earnings announcement, the analysts had been modelling revenues of US$101.4m and losses of US$0.26 per share in 2025.
The analysts have cut their price target 44% to US$2.50per share, signalling that the declining revenue and ongoing losses are contributing to the lower valuation.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. One thing stands out from these estimates, which is that Orion Energy Systems is forecast to grow faster in the future than it has in the past, with revenues expected to display 14% annualised growth until the end of 2025. If achieved, this would be a much better result than the 11% annual decline over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 8.5% annually. So it looks like Orion Energy Systems is expected to grow faster than its competitors, at least for a while.
The Bottom Line
The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. They also downgraded Orion Energy Systems' revenue estimates, but industry data suggests that it is expected to grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Orion Energy Systems' future valuation.
With that in mind, we wouldn't be too quick to come to a conclusion on Orion Energy Systems. Long-term earnings power is much more important than next year's profits. We have analyst estimates for Orion Energy Systems going out as far as 2027, and you can see them free on our platform here.
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 2 warning signs with Orion Energy Systems , and understanding them should be part of your investment process.
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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.
