These Analysts Think Aumann AG's (ETR:AAG) Earnings Are Under Threat

Today is shaping up negative for Aumann AG (ETR:AAG) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Both revenue and earnings per share (EPS) estimates were cut sharply as analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

Following the latest downgrade, the current consensus, from the four analysts covering Aumann, is for revenues of €161m in 2021, which would reflect a definite 8.2% reduction in Aumann's sales over the past 12 months. Losses are predicted to fall substantially, shrinking 83% to €0.20. Before this latest update, the analysts had been forecasting revenues of €195m and earnings per share (EPS) of €0.26 in 2021. There looks to have been a major change in sentiment regarding Aumann's prospects, with a measurable cut to revenues and the analysts now forecasting a loss instead of a profit.

See our latest analysis for Aumann

There was no major change to the consensus price target of €13.80, signalling that the business is performing roughly in line with expectations, despite lower earnings per share forecasts. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Aumann analyst has a price target of €16.50 per share, while the most pessimistic values it at €12.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

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 8.2% by the end of 2021. This indicates a significant reduction from annual growth of 9.1% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 6.8% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Aumann is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that analysts are expecting Aumann to become unprofitable this year. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. We're also surprised to see that the price target went unchanged. Still, deteriorating business conditions (assuming accurate forecasts!) can be a leading indicator for the stock price, so we wouldn't blame investors for being more cautious on Aumann after the downgrade.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for Aumann going out to 2023, and you can see them free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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This article by Simply Wall St is general in nature. 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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