The latest analyst coverage could presage a bad day for RCM Technologies, Inc. (NASDAQ:RCMT), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.
Following the latest downgrade, RCM Technologies' two analysts currently expect revenues in 2023 to be US$283m, approximately in line with the last 12 months. Statutory earnings per share are supposed to decrease 2.4% to US$2.19 in the same period. Previously, the analysts had been modelling revenues of US$322m and earnings per share (EPS) of US$2.20 in 2023. Indeed we can see that the consensus opinion has undergone some fundamental changes following the recent consensus updates, with a measurable cut to revenues and some minor tweaks to earnings numbers.
Our analysis indicates that RCMT is potentially undervalued!
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's pretty clear that there is an expectation that RCM Technologies' revenue growth will slow down substantially, with revenues to the end of 2023 expected to display 1.1% growth on an annualised basis. This is compared to a historical growth rate of 3.8% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 6.0% per year. Factoring in the forecast slowdown in growth, it seems obvious that RCM Technologies is also expected to grow slower than other industry participants.
The Bottom Line
The most obvious conclusion from this consensus update is that there's been no major change in the business' prospects in recent times, with analysts holding earnings per share steady, in line with previous estimates. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. Overall, given the drastic downgrade to next year's forecasts, we'd be feeling a little more wary of RCM Technologies going forwards.
Still, the long-term prospects of the business are much more relevant than next year's earnings. We have analyst estimates for RCM Technologies going out as far as 2023, and you can see them free on our platform here.
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
Valuation is complex, but we're helping make it simple.
Find out whether RCM Technologies is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.
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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.
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