It's been a pretty great week for A10 Networks, Inc. (NYSE:ATEN) shareholders, with its shares surging 11% to US$8.26 in the week since its latest quarterly results. Revenues were US$53m, approximately in line with whatthe analyst expected, although statutory earnings per share (EPS) crushed expectations, coming in at US$0.05, an impressive 150% ahead of estimates. This is an important time for investors, as they can track a company's performance in its report, look at what expert is 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 analyst latest (statutory) post-earnings forecasts for next year.
Following the latest results, A10 Networks' sole analyst are now forecasting revenues of US$225.8m in 2020. This would be a satisfactory 2.9% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to jump 191% to US$0.14. Yet prior to the latest earnings, the analyst had been anticipated revenues of US$223.9m and earnings per share (EPS) of US$0.11 in 2020. There was no real change to the revenue estimates, but the analyst does seem more bullish on earnings, given the massive increase in earnings per share expectations following these results.
The analyst has been lifting their price targets on the back of the earnings upgrade, with the consensus price target rising 20% to US$12.25.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the A10 Networks' past performance and to peers in the same industry. It's clear from the latest estimates that A10 Networks' rate of growth is expected to accelerate meaningfully, with the forecast 2.9% revenue growth noticeably faster than its historical growth of 2.0%p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 12% per year. So it's clear that despite the acceleration in growth, A10 Networks is expected to grow meaningfully slower than the industry average.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around A10 Networks' earnings potential next year. Fortunately, the analyst also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that A10 Networks' revenues are expected to perform worse than the wider industry. There was also a nice increase in the price target, with the analyst clearly feeling that the intrinsic value of the business is improving.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At least one analyst has provided forecasts out to 2021, which can be seen for free on our platform here.
You still need to take note of risks, for example - A10 Networks has 4 warning signs we think you should be aware of.
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.
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