One of the biggest stories of last week was how AutoWeb, Inc. (NASDAQ:AUTO) shares plunged 25% in the week since its latest third-quarter results, closing yesterday at US$2.32. It looks like weak result overall, with ongoing losses and revenues of US$18m falling short of analyst predictions. The losses were a relative bright spot though, with a per-share (statutory) loss of US$0.03 being 57% smaller than what the analysts had presumed. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the current consensus, from the four analysts covering AutoWeb, is for revenues of US$88.9m in 2021, which would reflect a considerable 8.1% reduction in AutoWeb's sales over the past 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 80% to US$0.16. Before this earnings announcement, the analysts had been modelling revenues of US$93.2m and losses of US$0.17 per share in 2021. It looks like there's been a modest increase in sentiment in the recent updates, with the analysts becoming a bit more optimistic in their predictions for losses per share, even though the revenue numbers fell somewhat.
The consensus price target fell 28% to US$4.17, with the dip in revenue estimates clearly souring sentiment, despite the forecast reduction in losses. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on AutoWeb, with the most bullish analyst valuing it at US$5.00 and the most bearish at US$3.00 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. One more thing stood out to us about these estimates, and it's the idea that AutoWeb'sdecline is expected to accelerate, with revenues forecast to fall 8.1% next year, topping off a historical decline of 6.3% a year over the past five years. Compare this against analyst estimates for companies in the wider industry, which suggest that revenues (in aggregate) are expected to grow 16% next year. So it's pretty clear that, while it does have declining revenues, the analysts also expect AutoWeb to suffer worse than the wider industry.
The Bottom Line
The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. 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. Yet - earnings are more important to the intrinsic value of the business. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of AutoWeb's future valuation.
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 AutoWeb going out to 2022, and you can see them free on our platform here..
You still need to take note of risks, for example - AutoWeb has 3 warning signs (and 1 which is a bit concerning) we think you should know about.
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 email@example.com.