Aston Martin Lagonda Global Holdings plc (LON:AML) shareholders are probably feeling a little disappointed, since its shares fell 5.7% to UK£20.08 in the week after its latest annual results. Results overall weren’t great; even though revenues of UK£612m beat expectations by 12%, statutory losses ballooned to UK£5.43 per share, substantially worse than the analysts had expected. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there’s been a strong change in the company’s prospects, or if it’s business as usual. With this in mind, we’ve gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Following the latest results, Aston Martin Lagonda Global Holdings’ six analysts are now forecasting revenues of UK£1.12b in 2021. This would be a huge 83% improvement in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 77% to UK£1.28. Yet prior to the latest earnings, the analysts had been forecasting revenues of UK£1.11b and losses of UK£1.28 per share in 2021.
The consensus price target rose 18% to UK£13.27, with the analysts increasing their valuations as the business executes in line with forecasts. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company’s valuation. There are some variant perceptions on Aston Martin Lagonda Global Holdings, with the most bullish analyst valuing it at UK£28.00 and the most bearish at UK£3.40 per share. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how analysts think this business will perform. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of 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. It’s clear from the latest estimates that Aston Martin Lagonda Global Holdings’ rate of growth is expected to accelerate meaningfully, with the forecast 83% revenue growth noticeably faster than its historical growth of 3.8%p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 6.2% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Aston Martin Lagonda Global Holdings to grow faster than the wider industry.
The Bottom Line
The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations – and our data suggests that revenues are expected to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
With that said, the long-term trajectory of the company’s earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Aston Martin Lagonda Global Holdings going out to 2025, and you can see them free on our platform here..
We don’t want to rain on the parade too much, but we did also find 3 warning signs for Aston Martin Lagonda Global Holdings (1 is a bit concerning!) that you need to be mindful of.
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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