As you might know, Auto Trader Group plc (LON:AUTO) recently reported its interim numbers. Results overall were respectable, with statutory earnings of UK£0.22 per share roughly in line with what the analysts had forecast. Revenues of UK£118m came in 2.2% ahead of analyst predictions. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Taking into account the latest results, the current consensus, from the 18 analysts covering Auto Trader Group, is for revenues of UK£278.1m in 2021, which would reflect a noticeable 7.4% reduction in Auto Trader Group's sales over the past 12 months. Statutory earnings per share are expected to descend 16% to UK£0.14 in the same period. In the lead-up to this report, the analysts had been modelling revenues of UK£290.9m and earnings per share (EPS) of UK£0.15 in 2021. It's pretty clear that pessimism has reared its head after the latest results, leading to a weaker revenue outlook and a small dip in earnings per share estimates.
Despite the cuts to forecast earnings, there was no real change to the UK£5.63 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Auto Trader Group at UK£7.05 per share, while the most bearish prices it at UK£3.48. 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.
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. These estimates imply that sales are expected to slow, with a forecast revenue decline of 7.4%, a significant reduction from annual growth of 5.0% 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 22% annually for the foreseeable future. It's pretty clear that Auto Trader Group's revenues are expected to perform substantially worse 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. 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. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Auto Trader Group going out to 2024, and you can see them free on our platform here..
Plus, you should also learn about the 1 warning sign we've spotted with Auto Trader Group .
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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