Altus Group Limited Just Reported A Surprise Loss: Here's What Analysts Think Will Happen Next
Altus Group Limited (TSE:AIF) last week reported its latest quarterly results, which makes it a good time for investors to dive in and see if the business is performing in line with expectations. Revenues of CA$131m beat expectations by 3.6%. Unfortunately statutory earnings per share (EPS) fell well short of the mark, turning in a loss of CA$0.10 compared to previous analyst expectations of a profit. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. 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 Altus Group
Following the recent earnings report, the consensus from eight analysts covering Altus Group is for revenues of CA$542.6m in 2020, implying a noticeable 6.7% decline in sales compared to the last 12 months. Per-share earnings are expected to surge 23% to CA$0.61. Yet prior to the latest earnings, the analysts had been anticipated revenues of CA$560.9m and earnings per share (EPS) of CA$0.85 in 2020. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a pretty serious reduction to earnings per share estimates.
The analysts made no major changes to their price target of CA$42.78, suggesting the downgrades are not expected to have a long-term impact on Altus Group'svaluation. 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. Currently, the most bullish analyst values Altus Group at CA$47.00 per share, while the most bearish prices it at CA$25.00. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Altus Group's past performance and to peers in the same industry. We would highlight that sales are expected to reverse, with the forecast 6.7% revenue decline a notable change from historical growth of 8.1% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 5.1% next year. It's pretty clear that Altus Group's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Altus Group going out to 2021, and you can see them free on our platform here.
Even so, be aware that Altus Group is showing 2 warning signs in our investment analysis , you should know about...
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