Yahoo Finance Some Argan, Inc. (NYSE:AGX) Analysts Just Made A Major Cut To Next Year's Estimates
The analysts covering Argan, Inc. (NYSE:AGX) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for next year. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analysts have soured majorly on the business.
After the downgrade, the dual analysts covering Argan are now predicting revenues of US$584m in 2024. If met, this would reflect a major 27% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to jump 83% to US$2.93. Before this latest update, the analysts had been forecasting revenues of US$651m and earnings per share (EPS) of US$3.40 in 2024. Indeed, we can see that the analysts are a lot more bearish about Argan's prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.
View our latest analysis for Argan
Analysts made no major changes to their price target of US$53.50, suggesting the downgrades are not expected to have a long-term impact on Argan's valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Argan analyst has a price target of US$61.00 per share, while the most pessimistic values it at US$46.00. With such a narrow range of valuations, analysts apparently share similar views on what they think the business is worth.
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. For example, we noticed that Argan's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 21% growth to the end of 2024 on an annualised basis. That is well above its historical decline of 13% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 6.6% per year. Not only are Argan's revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. The lack of change in the price target is puzzling in light of the downgrade but, with a serious decline expected next year, we wouldn't be surprised if investors were a bit wary of Argan.
Still, the long-term prospects of the business are much more relevant than next year's earnings. At least one analyst has provided forecasts out to 2025, which can be seen for free on our platform here.
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
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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.
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