The Aaron's Company, Inc. Just Missed Earnings - But Analysts Have Updated Their Models
There's been a notable change in appetite for The Aaron's Company, Inc. (NYSE:AAN) shares in the week since its yearly report, with the stock down 18% to US$8.52. Statutory earnings per share fell badly short of expectations, coming in at US$0.09, some 80% below analyst forecasts, although revenues were okay, approximately in line with analyst estimates at US$2.1b. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Check out our latest analysis for Aaron's Company
Following last week's earnings report, Aaron's Company's five analysts are forecasting 2024 revenues to be US$2.16b, approximately in line with the last 12 months. Per-share earnings are expected to shoot up 797% to US$0.83. Before this earnings report, the analysts had been forecasting revenues of US$2.19b and earnings per share (EPS) of US$0.88 in 2024. The analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share numbers for next year.
The average price target fell 5.1% to US$11.20, with reduced earnings forecasts clearly tied to a lower valuation estimate. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Aaron's Company, with the most bullish analyst valuing it at US$16.00 and the most bearish at US$8.00 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
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. It's pretty clear that there is an expectation that Aaron's Company's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 0.9% growth on an annualised basis. This is compared to a historical growth rate of 6.4% 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 5.2% per year. Factoring in the forecast slowdown in growth, it seems obvious that Aaron's Company is also expected to grow slower than other industry participants.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Aaron's Company. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
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 Aaron's Company going out to 2026, and you can see them free on our platform here..
Before you take the next step you should know about the 2 warning signs for Aaron's Company that we have uncovered.
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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.
