Ares Management Corporation Just Missed Revenue By 7.6%: Here's What Analysts Think Will Happen Next
It's been a mediocre week for Ares Management Corporation (NYSE:ARES) shareholders, with the stock dropping 12% to US$66.22 in the week since its latest first-quarter results. Results look mixed - while revenue fell marginally short of analyst estimates at US$559m, statutory earnings were in line with expectations, at US$0.65 per share. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
See our latest analysis for Ares Management
After the latest results, the consensus from Ares Management's eight analysts is for revenues of US$2.94b in 2022, which would reflect a stressful 31% decline in sales compared to the last year of performance. Statutory earnings per share are predicted to surge 179% to US$3.44. Before this earnings report, the analysts had been forecasting revenues of US$3.03b and earnings per share (EPS) of US$3.24 in 2022. If anything, the analysts look to have become slightly more optimistic overall; while they decreased their revenue forecasts, EPS predictions increased and ultimately earnings are more important.
The consensus has made no major changes to the price target of US$93.36, suggesting the forecast improvement in earnings is expected to offset the decline in revenues next year. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Ares Management analyst has a price target of US$110 per share, while the most pessimistic values it at US$82.00. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Ares Management is an easy business to forecast or the the analysts are all using similar assumptions.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 39% by the end of 2022. This indicates a significant reduction from annual growth of 26% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 5.1% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Ares Management is expected to lag the wider industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Ares Management following these results. Unfortunately, they also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target held steady at US$93.36, with the latest estimates not enough to have an impact on their price targets.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Ares Management going out to 2024, and you can see them free on our platform here..
Plus, you should also learn about the 5 warning signs we've spotted with Ares Management (including 2 which can't be ignored) .
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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.
