Market forces came down on Data I/O Corporation (NASDAQ:DAIO) shareholder expectations today, with the analyst covering the company lowering his forecasts for the year. Both revenue and earnings per share (EPS) estimates were cut sharply, as the analyst took into account the latest business outlook and concluded that his previous expectations were too optimistic.
Following the latest downgrade, the current consensus from the lone analyst covering Data I/O is for revenues of US$24 million in 2024, which reflects a 2.1% decline in Data I/O’s sales over the past 12 months. Losses per share are expected to decline significantly in the near future, shrinking by 45% to US$0.09. Prior to this latest update, the analyst was forecasting revenues of US$29 million and earnings per share (EPS) of US$0.10 in 2024. So, with these figures we can see that the consensus has become significantly bearish on Data I/O’s prospects, with them substantially lowering their revenue estimates for this year. Additionally, the analyst now expects the business to be in the red this year, compared to their previous forecast of a profit.
Read the latest analysis of Data I/O
Revenue and income growth
The consensus price target fell 20% to $4.00, implying that declining earnings per share is a leading indicator of Data I/O’s valuation.
Looking at the bigger picture, one way to understand these forecasts is to see how they compare to both past performance and industry growth projections. Sales are expected to reverse, with annual revenue projected to decline 4.1% by the end of 2024. This is a notable change from the 4.9% growth rate over the past five years. In contrast, our data shows that other companies in the same industry (with analyst coverage) are forecast to grow revenue at 7.0% annually for the foreseeable future. So, while revenue is projected to decline, there is no silver lining to this cloud. Data I/O is expected to lag behind the overall industry.
Conclusion
The biggest negative for us is that Data I/O’s outlook for this year has been cut from a profit to a loss. Unfortunately, the company also cut its earnings guidance, with its latest forecast suggesting that its revenue growth will be slower than the overall market. Given the scope of the downgrade, it’s understandable that the market is becoming more cautious about the company.
Having said that, the long-term trajectory of the company’s earnings is much more important than next year. We have analyst forecasts for Data I/O going out to 2025, and you can see them free on our platform.
The story continues
Of course, seeing if a company’s management has significant money invested in a stock can be just as useful as knowing whether analysts have been revising their estimates downwards, so you might also want to search for this free list of stocks with high insider ownership.
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