Shareholders might have noticed that nVent Electric plc (NYSE:NVT) filed its quarterly result this time last week. The early response was not positive, with shares down 9.6% to US$62.78 in the past week. Revenues of US$880m were in line with forecasts, although statutory earnings per share (EPS) came in below expectations at US$0.66, missing estimates by 7.0%. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Following the latest results, nVent Electric's twelve analysts are now forecasting revenues of US$3.63b in 2024. This would be a modest 4.5% improvement in revenue compared to the last 12 months. Statutory earnings per share are expected to plunge 22% to US$2.72 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$3.58b and earnings per share (EPS) of US$2.85 in 2024. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a minor downgrade to their earnings per share forecasts.
The consensus price target held steady at US$85.32, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on nVent Electric, with the most bullish analyst valuing it at US$91.62 and the most bearish at US$79.00 per share. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. The period to the end of 2024 brings more of the same, according to the analysts, with revenue forecast to display 9.2% growth on an annualised basis. That is in line with its 11% annual growth over the past five years. Juxtapose this against our data, which suggests that other companies (with analyst coverage) in the industry are forecast to see their revenues grow 7.9% per year. So although nVent Electric is expected to maintain its revenue growth rate, it's only growing at about the rate of the wider industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. The consensus price target held steady at US$85.32, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn't be too quick to come to a conclusion on nVent Electric. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple nVent Electric analysts - going out to 2026, and you can see them free on our platform here.
It is also worth noting that we have found 3 warning signs for nVent Electric (1 makes us a bit uncomfortable!) 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.