Yahoo Finance Bearish: Analysts Just Cut Their Argan, Inc. (NYSE:AGX) Revenue and EPS estimates
The latest analyst coverage could presage a bad day for Argan, Inc. (NYSE:AGX), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Both revenue and earnings per share (EPS) estimates were cut sharply as the analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.
After the downgrade, the dual analysts covering Argan are now predicting revenues of US$625m in 2023. If met, this would reflect a substantial 25% improvement in sales compared to the last 12 months. Statutory earnings per share are forecast to be US$2.95, approximately in line with the last 12 months. Before this latest update, the analysts had been forecasting revenues of US$775m and earnings per share (EPS) of US$4.04 in 2023. It looks like analyst sentiment has declined substantially, with a substantial drop in revenue estimates and a large cut to earnings per share numbers as well.
Check out our latest analysis for Argan
The consensus price target fell 8.3% to US$55.50, with the weaker earnings outlook clearly leading analyst 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. The most optimistic Argan analyst has a price target of US$61.00 per share, while the most pessimistic values it at US$50.00. This is a very narrow spread of estimates, implying either that Argan is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Argan's past performance and to peers in the same industry. One thing stands out from these estimates, which is that Argan is forecast to grow faster in the future than it has in the past, with revenues expected to display 19% annualised growth until the end of 2023. If achieved, this would be a much better result than the 19% annual decline 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 8.6% per year. So it looks like Argan is expected to grow faster than its competitors, at least for a while.
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. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of Argan.
Still, the long-term prospects of the business are much more relevant than next year's earnings. We have analyst estimates for Argan going out as far as 2024, and you can see them 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.
