Vertiv Holdings Co. (NYSE:VRT) shareholders are probably feeling a little disappointed, since its shares fell 3.2% to US$20.93 in the week after its latest full-year results. Revenues came in at US$4.4b, in line with forecasts and the company reported a statutory loss of US$0.60 per share, roughly in line with expectations. This is an important time for investors, as they can track a company’s performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
See our latest analysis for Vertiv Holdings
After the latest results, the six analysts covering Vertiv Holdings are now predicting revenues of US$4.80b in 2021. If met, this would reflect a solid 9.7% improvement in sales compared to the last 12 months. Vertiv Holdings is also expected to turn profitable, with statutory earnings of US$0.71 per share. Before this earnings report, the analysts had been forecasting revenues of US$4.66b and earnings per share (EPS) of US$0.70 in 2021. So it looks like there’s been no major change in sentiment following the latest results, although the analysts have made a slight bump in to revenue forecasts.
Even though revenue forecasts increased, there was no change to the consensus price target of US$26.00, suggesting the analysts are focused on earnings as the driver of value creation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Vertiv Holdings, with the most bullish analyst valuing it at US$30.00 and the most bearish at US$24.00 per share. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Vertiv Holdings is an easy business to forecast or the the analysts are all using similar assumptions.
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 Vertiv Holdings’ growth to accelerate, with the forecast 9.7% growth ranking favourably alongside historical growth of 2.5% per annum over the past three years. Other similar companies in the industry (with analyst coverage) are also forecast to grow their revenue at 10% per year. Factoring in the forecast acceleration in revenue, it’s pretty clear that Vertiv Holdings is expected to grow at about the same rate as the wider industry.
The Bottom Line
The most important thing to take away is that there’s been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. They also upgraded their revenue forecasts, although the latest estimates suggest that Vertiv Holdings will grow in line with the overall industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that in mind, we wouldn’t be too quick to come to a conclusion on Vertiv Holdings. Long-term earnings power is much more important than next year’s profits. At Simply Wall St, we have a full range of analyst estimates for Vertiv Holdings going out to 2023, and you can see them free on our platform here..
You should always think about risks though. Case in point, we’ve spotted 1 warning sign for Vertiv Holdings you should be aware of.
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This article by Simply Wall St is general in nature. 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.
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