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Today is shaping up negative for Altisource Portfolio Solutions S.A. (NASDAQ:ASPS) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analysts have soured majorly on the business. Investors however, have been notably more optimistic about Altisource Portfolio Solutions recently, with the stock price up a noteworthy 19% to US$8.00 in the past week. It will be interesting to see if the downgrade has an impact on buying demand for the company's shares.
Following the downgrade, the consensus from two analysts covering Altisource Portfolio Solutions is for revenues of US$393m in 2020, implying a sizeable 34% decline in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 90% to US$1.96. Yet before this consensus update, the analysts had been forecasting revenues of US$438m and losses of US$1.07 per share in 2020. Ergo, there's been a clear change in sentiment, with the analysts administering a notable cut to this year's revenue estimates, while at the same time increasing their loss per share forecasts.
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. One more thing stood out to us about these estimates, and it's the idea that Altisource Portfolio Solutions'decline is expected to accelerate, with revenues forecast to fall 34% next year, topping off a historical decline of 9.5% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 4.3% per year. So while a broad number of companies are forecast to decline, unfortunately Altisource Portfolio Solutions is expected to see its sales affected worse than other companies in the industry.
The Bottom Line
The most important thing to take away is that analysts increased their loss per share estimates for this year. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. Given the serious cut to this year's outlook, it's clear that analysts have turned more bearish on Altisource Portfolio Solutions, and we wouldn't blame shareholders for feeling a little more cautious themselves.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have analyst estimates for Altisource Portfolio Solutions going out as far as 2021, and you can see them free on our platform here.
Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.
If you spot an error that warrants correction, please contact the editor at email@example.com. 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. Simply Wall St has no position in the stocks mentioned.
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