The analysts covering Kimball Electronics, Inc. (NASDAQ:KE) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analysts have soured majorly on the business.

After the downgrade, the consensus from Kimball Electronics' five analysts is for revenues of US$1.5b in 2025, which would reflect a chunky 14% decline in sales compared to the last year of performance. Statutory earnings per share are presumed to leap 28% to US$1.06. Before this latest update, the analysts had been forecasting revenues of US$1.8b and earnings per share (EPS) of US$1.83 in 2025. It looks like analyst sentiment has declined substantially, with a substantial drop in revenue estimates and a large cut to earnings per share numbers as well.

The consensus price target fell 22% to US$22.60, with the weaker earnings outlook clearly leading analyst valuation estimates.

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. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 14% by the end of 2025. This indicates a significant reduction from annual growth of 10% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 7.4% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Kimball Electronics is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. Given the scope of the downgrades, it would not be a surprise to see the market become more wary of the business.

A high debt burden combined with a downgrade of this magnitude always gives us some reason for concern, especially if these forecasts are just the first sign of a business downturn. See why we're concerned about Kimball Electronics' balance sheet by visiting our risks dashboard for free on our platform here.

We also provide an overview of the Kimball Electronics Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.

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