It's been a sad week for ASOS Plc (LON:ASC), who've watched their investment drop 13% to UK£47.10 in the week since the company reported its yearly result. It looks like a credible result overall - although revenues of UK£3.3b were in line with what the analysts predicted, ASOS surprised by delivering a statutory profit of UK£1.26 per share, a notable 17% above expectations. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on ASOS after the latest results.
Taking into account the latest results, the most recent consensus for ASOS from 23 analysts is for revenues of UK£3.82b in 2021 which, if met, would be a meaningful 17% increase on its sales over the past 12 months. Statutory earnings per share are expected to descend 12% to UK£1.11 in the same period. Before this earnings report, the analysts had been forecasting revenues of UK£3.71b and earnings per share (EPS) of UK£1.10 in 2021. So it looks like there's been no major change in sentiment following the latest results, although the analysts have made a slight bump in to revenue forecasts.
Even though revenue forecasts increased, there was no change to the consensus price target of UK£52.38, suggesting the analysts are focused on earnings as the driver of value creation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values ASOS at UK£75.20 per share, while the most bearish prices it at UK£30.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
Of course, another way to look at these forecasts is to place them into context against the industry itself. We can infer from the latest estimates that forecasts expect a continuation of ASOS'historical trends, as next year's 17% revenue growth is roughly in line with 20% annual revenue growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 13% per year. So it's pretty clear that ASOS is forecast to grow substantially faster than its industry.
The Bottom Line
The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Happily, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider industry. 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.
With that in mind, we wouldn't be too quick to come to a conclusion on ASOS. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for ASOS going out to 2025, and you can see them free on our platform here..
It is also worth noting that we have found 2 warning signs for ASOS that you need to take into consideration.
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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