Earnings Miss: APA Group Missed EPS By 13% And Analysts Are Revising Their Forecasts

APA Group (ASX:APA) missed earnings with its latest yearly results, disappointing overly-optimistic forecasters. It wasn't a great result overall - while revenue fell marginally short of analyst estimates at AU$3.1b, statutory earnings missed forecasts by 13%, coming in at just AU$0.79 per share. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

See our latest analysis for APA Group

Taking into account the latest results, the most recent consensus for APA Group from ten analysts is for revenues of AU$3.27b in 2025. If met, it would imply a credible 6.8% increase on its revenue over the past 12 months. Statutory earnings per share are expected to crater 77% to AU$0.18 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of AU$3.40b and earnings per share (EPS) of AU$0.21 in 2025. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a real cut to earnings per share estimates.

Despite the cuts to forecast earnings, there was no real change to the AU$8.71 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic APA Group analyst has a price target of AU$9.40 per share, while the most pessimistic values it at AU$7.44. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.

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. The analysts are definitely expecting APA Group's growth to accelerate, with the forecast 6.8% annualised growth to the end of 2025 ranking favourably alongside historical growth of 4.2% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 3.7% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that APA Group 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 APA Group. They also downgraded APA Group's revenue estimates, but industry data suggests that it is expected 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 APA Group. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple APA Group analysts - going out to 2027, and you can see them free on our platform here.

It is also worth noting that we have found 3 warning signs for APA Group (2 make us uncomfortable!) that you need to take into consideration.

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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.