One of the biggest stories of last week was how Orion Energy Systems, Inc. (NASDAQ:OESX) shares plunged 39% in the week since its latest second-quarter results, closing yesterday at US$12.51. Revenues fell 8.9% short of expectations, at US$22m. Earnings correspondingly dipped, with Orion Energy Systems reporting a statutory loss of US$0.20 per share, whereas the analysts had previously modelled a profit in this period. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Taking into account the latest results, the most recent consensus for Orion Energy Systems from dual analysts is for revenues of US$101.8m in 2027. If met, it would imply a meaningful 8.0% increase on its revenue over the past 12 months. Earnings are expected to improve, with Orion Energy Systems forecast to report a statutory profit of US$0.87 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$101.8m and earnings per share (EPS) of US$0.69 in 2027. There was no real change to the revenue estimates, but the analysts do seem more bullish on earnings, given the great increase in earnings per share expectations following these results.
See our latest analysis for Orion Energy Systems
The consensus price target was unchanged at US$36.50, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders.
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. One thing stands out from these estimates, which is that Orion Energy Systems is forecast to grow faster in the future than it has in the past, with revenues expected to display 17% annualised growth until the end of 2027. If achieved, this would be a much better result than the 8.0% annual decline over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 13% annually. So it looks like Orion Energy Systems is expected to grow faster than its competitors, at least for a while.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Orion Energy Systems following these results. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target held steady at US$36.50, with the latest estimates not enough to have an impact on their price targets.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have analyst estimates for Orion Energy Systems going out as far as 2029, and you can see them free on our platform here.
You should always think about risks though. Case in point, we've spotted 4 warning signs for Orion Energy Systems you should be aware of, and 1 of them is a bit concerning.
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