Yahoo Finance AutoCanada Inc. Reported A Surprise Loss, And Analysts Have Updated Their Forecasts
It's been a mediocre week for AutoCanada Inc. (TSE:ACQ) shareholders, with the stock dropping 15% to CA$20.33 in the week since its latest quarterly results. It was a pretty negative result overall, with revenues of CA$1.4b missing analyst predictions by 5.2%. Worse, the business reported a statutory loss of CA$0.10 per share, a substantial decline on analyst expectations of a profit. 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 collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
See our latest analysis for AutoCanada
Taking into account the latest results, the current consensus, from the nine analysts covering AutoCanada, is for revenues of CA$6.08b in 2024. This implies a measurable 3.8% reduction in AutoCanada's revenue over the past 12 months. Statutory earnings per share are forecast to decrease 4.4% to CA$1.64 in the same period. In the lead-up to this report, the analysts had been modelling revenues of CA$6.39b and earnings per share (EPS) of CA$3.46 in 2024. The analysts seem less optimistic after the recent results, reducing their revenue forecasts and making a pretty serious reduction to earnings per share numbers.
The consensus price target fell 22% to CA$22.56, with the weaker earnings outlook clearly leading valuation estimates. 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. Currently, the most bullish analyst values AutoCanada at CA$28.50 per share, while the most bearish prices it at CA$18.00. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 5.0% by the end of 2024. This indicates a significant reduction from annual growth of 17% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 7.6% per year. It's pretty clear that AutoCanada'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. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of AutoCanada's future valuation.
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. We have forecasts for AutoCanada going out to 2026, and you can see them free on our platform here.
We don't want to rain on the parade too much, but we did also find 3 warning signs for AutoCanada (1 is a bit concerning!) that you need to be mindful of.
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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.
