Last week, you might have seen that Holley Inc. (NYSE:HLLY) released its quarterly result to the market. The early response was not positive, with shares down 2.2% to US$3.99 in the past week. Results overall were not great, with earnings of US$0.03 per share falling drastically short of analyst expectations. Meanwhile revenues hit US$159m and were slightly better than forecasts. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

See our latest analysis for Holley

Following last week's earnings report, Holley's ten analysts are forecasting 2024 revenues to be US$657.5m, approximately in line with the last 12 months. Per-share earnings are expected to bounce 55% to US$0.24. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$661.5m and earnings per share (EPS) of US$0.31 in 2024. So there's definitely been a decline in sentiment after the latest results, noting the large cut to new EPS forecasts.

The average price target fell 7.4% to US$6.92, with reduced earnings forecasts clearly tied to a lower valuation estimate. 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. There are some variant perceptions on Holley, with the most bullish analyst valuing it at US$12.00 and the most bearish at US$5.00 per share. With such a wide range in price targets, analysts are almost certainly betting on widely divergent outcomes in the underlying business. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. The analysts are definitely expecting Holley's growth to accelerate, with the forecast 2.3% annualised growth to the end of 2024 ranking favourably alongside historical growth of 1.5% per annum over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 11% per year. It seems obvious that, while the future growth outlook is brighter than the recent past, Holley is expected to grow slower than the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Holley. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

With that in mind, we wouldn't be too quick to come to a conclusion on Holley. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Holley analysts - going out to 2026, and you can see them free on our platform here.

You still need to take note of risks, for example - Holley has 2 warning signs (and 1 which makes us a bit uncomfortable) we think you should know about.

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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.