Earnings Update: ARB Corporation Limited (ASX:ARB) Just Reported Its Annual Results And Analysts Are Updating Their Forecasts

It's been a good week for ARB Corporation Limited (ASX:ARB) shareholders, because the company has just released its latest annual results, and the shares gained 3.4% to AU$41.60. It was a credible result overall, with revenues of AU$697m and statutory earnings per share of AU$1.25 both in line with analyst estimates, showing that ARB is executing in line with expectations. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

See our latest analysis for ARB

After the latest results, the 14 analysts covering ARB are now predicting revenues of AU$758.0m in 2025. If met, this would reflect a meaningful 8.8% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to rise 8.8% to AU$1.36. Before this earnings report, the analysts had been forecasting revenues of AU$762.4m and earnings per share (EPS) of AU$1.40 in 2025. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a small dip in their earnings per share forecasts.

The consensus price target held steady at AU$38.19, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. 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. The most optimistic ARB analyst has a price target of AU$48.00 per share, while the most pessimistic values it at AU$26.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await ARB shareholders.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We can infer from the latest estimates that forecasts expect a continuation of ARB'shistorical trends, as the 8.8% annualised revenue growth to the end of 2025 is roughly in line with the 9.6% annual growth over the past five years. Juxtapose this against our data, which suggests that other companies (with analyst coverage) in the industry are forecast to see their revenues grow 8.8% per year. It's clear that while ARB's revenue growth is expected to continue on its current trajectory, it's only expected to grow in line with the industry itself.

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. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. The consensus price target held steady at AU$38.19, with the latest estimates not enough to have an impact on their price targets.

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 ARB going out to 2027, and you can see them free on our platform here.

We also provide an overview of the ARB Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.

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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.