Shareholders in Shoals Technologies Group, Inc. (NASDAQ:SHLS) had a terrible week, as shares crashed 20% to US$4.56 in the week since its latest third-quarter results. Revenues beat expectations, coming in 3.4% ahead of forecasts, and the company broke even on a statutory earnings per share (EPS) level. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
After the latest results, the 21 analysts covering Shoals Technologies Group are now predicting revenues of US$450.3m in 2025. If met, this would reflect a reasonable 6.5% improvement in revenue compared to the last 12 months. Per-share earnings are expected to soar 75% to US$0.34. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$453.0m and earnings per share (EPS) of US$0.34 in 2025. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.
The average the analysts price target fell 7.0% to US$7.86, suggesting thatthe analysts have other concerns, and the improved earnings per share outlook was not enough to allay them. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Shoals Technologies Group analyst has a price target of US$12.00 per share, while the most pessimistic values it at US$5.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's pretty clear that there is an expectation that Shoals Technologies Group's revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 5.2% growth on an annualised basis. This is compared to a historical growth rate of 27% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 8.8% per year. Factoring in the forecast slowdown in growth, it seems obvious that Shoals Technologies Group is also expected to grow slower than other industry participants.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Shoals Technologies Group's earnings potential next year. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Shoals Technologies Group's revenue is expected to perform worse 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 Shoals Technologies Group's future valuation.
With that in mind, we wouldn't be too quick to come to a conclusion on Shoals Technologies Group. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Shoals Technologies Group analysts - going out to 2026, and you can see them free on our platform here.
Before you take the next step you should know about the 2 warning signs for Shoals Technologies Group that we have uncovered.
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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.
