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American Resources Corporation (NASDAQ:AREC) Released Earnings Last Week And Analysts Lifted Their Price Target To US$4.00

Simply Wall St
·3 min read

American Resources Corporation (NASDAQ:AREC) shareholders are probably feeling a little disappointed, since its shares fell 5.9% to US$1.44 in the week after its latest quarterly results. American Resources' revenues suffered a miss, falling 26% short of forecasts, at US$295k. Statutory earnings per share (EPS) however performed much better, reaching break-even. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on American Resources after the latest results.

Check out our latest analysis for American Resources

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Taking into account the latest results, the consensus forecast from American Resources' twin analysts is for revenues of US$84.6m in 2021, which would reflect a major 1,053% improvement in sales compared to the last 12 months. Per-share statutory losses are expected to explode, reaching US$0.08 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$84.9m and earnings per share (EPS) of US$0.36 in 2021. So despite reconfirming their revenue estimates, the analysts are now forecasting a loss instead of a profit, which looks like a definite drop in sentiment following the latest results.

Despite expectations of heavier losses next year,the analysts have lifted their price target 129% to US$4.00, perhaps implying these losses are not expected to be recurring over the long term.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. One thing stands out from these estimates, which is that American Resources is forecast to grow faster in the future than it has in the past, with revenues expected to grow manyfold. If achieved, this would be a much better result than the 15% annual decline over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 11% per year. Not only are American Resources' revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.

The Bottom Line

The biggest low-light for us was that the forecasts for American Resources dropped from profits to 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. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have analyst estimates for American Resources going out as far as 2024, and you can see them free on our platform here.

You should always think about risks though. Case in point, we've spotted 4 warning signs for American Resources you should be aware of, and 1 of them is concerning.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.