Shareholders in Auction Technology Group plc (LON:ATG) had a terrible week, as shares crashed 23% to UK£4.91 in the week since its latest full-year results. It looks to have been a decent result overall - while revenue fell marginally short of analyst estimates at UK£135m, statutory earnings beat expectations by a notable 75%, coming in at UK£0.14 per share. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Taking into account the latest results, the most recent consensus for Auction Technology Group from six analysts is for revenues of UK£155.8m in 2024. If met, it would imply a decent 15% increase on its revenue over the past 12 months. Statutory earnings per share are expected to decline 16% to UK£0.12 in the same period. Before this earnings report, the analysts had been forecasting revenues of UK£162.9m and earnings per share (EPS) of UK£0.14 in 2024. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a substantial drop in earnings per share estimates.
Despite the cuts to forecast earnings, there was no real change to the UK£10.06 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. 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. There are some variant perceptions on Auction Technology Group, with the most bullish analyst valuing it at UK£15.36 and the most bearish at UK£7.50 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
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. It's pretty clear that there is an expectation that Auction Technology Group's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 15% growth on an annualised basis. This is compared to a historical growth rate of 29% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 3.2% per year. Even after the forecast slowdown in growth, it seems obvious that Auction Technology Group is also expected to grow faster 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. They also downgraded Auction Technology Group's revenue estimates, but industry data suggests that it is expected to grow faster than the wider industry. The consensus price target held steady at UK£10.06, 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. We have estimates - from multiple Auction Technology Group analysts - going out to 2026, and you can see them free on our platform here.
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 2 warning signs with Auction Technology Group , and understanding them should be part of your investment process.
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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.