Last week, you might have seen that AptarGroup, Inc. (NYSE:ATR) released its yearly result to the market. The early response was not positive, with shares down 4.0% to US$112 in the past week. It looks like the results were a bit of a negative overall. While revenues of US$2.9b were in line with analyst predictions, statutory earnings were less than expected, missing estimates by 2.9% to hit US$3.66 per share. Following the result, 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. So we gathered the latest post-earnings forecasts to see what analysts' statutory forecasts suggest is in store for next year.
Taking into account the latest results, the latest consensus from AptarGroup's ten analysts is for revenues of US$2.96b in 2020, which would reflect a satisfactory 3.6% improvement in sales compared to the last 12 months. Statutory per-share earnings are expected to be US$3.81, roughly flat on the last 12 months. In the lead-up to this report, analysts had been modelling revenues of US$2.98b and earnings per share (EPS) of US$4.30 in 2020. So there's definitely been a decline in analyst sentiment after the latest results, noting the substantial drop in new EPS forecasts.
The consensus price target held steady at US$118, with analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic AptarGroup analyst has a price target of US$136 per share, while the most pessimistic values it at US$92.00. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
Further, we can compare these estimates to past performance, and see how AptarGroup forecasts compare to the wider market's forecast performance. We can infer from the latest estimates that analysts are expecting a continuation of AptarGroup's historical trends, as next year's forecast 3.6% revenue growth is roughly in line with 3.9% annual revenue growth 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 revenues grow 2.8% per year. So it's pretty clear that AptarGroup is forecast to grow substantially faster than its market.
The Bottom Line
The most important thing to take away is that analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - and our data does suggest that AptarGroup's revenues are expected to grow faster than the wider market. 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 estimates - from multiple AptarGroup analysts - going out to 2023, and you can see them free on our platform here.
It might also be worth considering whether AptarGroup's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
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