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Earnings Update: Sonos, Inc. (NASDAQ:SONO) Just Reported Its Second-Quarter Results And Analysts Are Updating Their Forecasts

Sonos, Inc. (NASDAQ:SONO) shareholders are probably feeling a little disappointed, since its shares fell 2.5% to US$16.63 in the week after its latest quarterly results. Revenues of US$253m beat expectations by a respectable 2.1%, although statutory losses per share increased. Sonos lost US$0.56, which was 21% more than what the analysts had included in their models. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

View our latest analysis for Sonos

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Taking into account the latest results, the current consensus from Sonos' six analysts is for revenues of US$1.65b in 2024. This would reflect a modest 6.9% increase on its revenue over the past 12 months. Earnings are expected to improve, with Sonos forecast to report a statutory profit of US$0.24 per share. Before this earnings report, the analysts had been forecasting revenues of US$1.65b and earnings per share (EPS) of US$0.25 in 2024. The analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share numbers for next year.

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It might be a surprise to learn that the consensus price target was broadly unchanged at US$23.80, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. 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 Sonos at US$25.00 per share, while the most bearish prices it at US$20.00. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company 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. The analysts are definitely expecting Sonos' growth to accelerate, with the forecast 14% annualised growth to the end of 2024 ranking favourably alongside historical growth of 6.9% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 5.6% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Sonos is expected to grow much faster than its industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Sonos. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target held steady at US$23.80, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on Sonos. Long-term earnings power is much more important than next year's profits. We have forecasts for Sonos going out to 2026, and you can see them free on our platform here.

Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.