AutoCanada Inc. Earnings Missed Analyst Estimates: Here's What Analysts Are Forecasting Now

Last week saw the newest annual earnings release from AutoCanada Inc. (TSE:ACQ), an important milestone in the company's journey to build a stronger business. It looks like a pretty bad result, all things considered. Although revenues of CA$6.4b were in line with analyst predictions, statutory earnings fell badly short, missing estimates by 43% to hit CA$2.06 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

Check out our latest analysis for AutoCanada

Taking into account the latest results, AutoCanada's nine analysts currently expect revenues in 2024 to be CA$6.39b, approximately in line with the last 12 months. Per-share earnings are expected to leap 32% to CA$2.82. Before this earnings report, the analysts had been forecasting revenues of CA$6.36b and earnings per share (EPS) of CA$3.46 in 2024. So there's definitely been a decline in sentiment after the latest results, noting the substantial drop in new EPS forecasts.

The average price target fell 5.9% to CA$28.11, with reduced earnings forecasts clearly tied to a lower valuation estimate. 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 AutoCanada analyst has a price target of CA$62.00 per share, while the most pessimistic values it at CA$20.00. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how analysts think this business will perform. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the AutoCanada's past performance and to peers in the same industry. We would highlight that revenue is expected to reverse, with a forecast 0.7% annualised decline to the end of 2024. That is a notable change from historical growth of 17% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 7.5% annually for the foreseeable future. It's pretty clear that AutoCanada's revenues are expected to perform substantially worse than the wider industry.

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. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple AutoCanada analysts - going out to 2026, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 2 warning signs for AutoCanada (1 shouldn't be ignored!) that you should be aware of.

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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.