Yahoo Finance Vroom, Inc. (NASDAQ:VRM) Just Reported And Analysts Have Been Cutting Their Estimates
It's been a good week for Vroom, Inc. (NASDAQ:VRM) shareholders, because the company has just released its latest first-quarter results, and the shares gained 7.6% to US$0.81. Revenues of US$196m fell short of estimates by 18%, but statutory losses were relatively mild, coming in 2.2% smaller than the analysts expected, at US$0.54 per share. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. 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 Vroom
Following the recent earnings report, the consensus from six analysts covering Vroom is for revenues of US$962.0m in 2023, implying a substantial 21% decline in sales compared to the last 12 months. Losses are forecast to balloon 27% to US$1.97 per share. Before this latest report, the consensus had been expecting revenues of US$1.02b and US$1.92 per share in losses. So it's pretty clear consensus is more negative on Vroom after the new consensus numbers; while the analysts trimmed their revenue estimates, they also administered a modest increase to per-share loss expectations.
The consensus price target fell 15% to US$1.08, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Vroom, with the most bullish analyst valuing it at US$1.30 and the most bearish at US$1.00 per share. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.
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 annualised revenue decline of 27% by the end of 2023. This indicates a significant reduction from annual growth of 19% over the last three years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 6.3% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Vroom is expected to lag the wider industry.
The Bottom Line
The most important thing to take away is that the analysts increased their loss per share estimates for next year. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues 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 Vroom's future valuation.
With that in mind, we wouldn't be too quick to come to a conclusion on Vroom. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Vroom analysts - going out to 2025, and you can see them free on our platform here.
And what about risks? Every company has them, and we've spotted 3 warning signs for Vroom (of which 1 is concerning!) you should know about.
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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.
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