Last week, you might have seen that Aston Martin Lagonda Global Holdings plc (LON:AML) released its yearly result to the market. The early response was not positive, with shares down 5.7% to UK£20.08 in the past week. Aston Martin Lagonda Global Holdings beat revenue forecasts by a solid 12%, hitting UK£612m. Statutory losses also blew out, with the loss per share reaching UK£5.43, some 54% bigger than the analysts expected. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the current consensus from Aston Martin Lagonda Global Holdings' six analysts is for revenues of UK£1.12b in 2021, which would reflect a major 83% increase on its sales over the past 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 77% to UK£1.28. Before this earnings announcement, the analysts had been modelling revenues of UK£1.11b and losses of UK£1.28 per share in 2021.
The average price target fell 18% to UK£13.27, with the ongoing losses seemingly a concern for the analysts, despite the lack of real change to the earnings forecasts. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Aston Martin Lagonda Global Holdings, with the most bullish analyst valuing it at UK£28.00 and the most bearish at UK£3.40 per share. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely different views on what kind of performance this business can generate. 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.
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. The analysts are definitely expecting Aston Martin Lagonda Global Holdings' growth to accelerate, with the forecast 83% growth ranking favourably alongside historical growth of 3.8% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 6.2% next year. Factoring in the forecast acceleration in revenue, it's pretty clear that Aston Martin Lagonda Global Holdings is expected to grow much faster than its industry.
The Bottom Line
The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
With that in mind, we wouldn't be too quick to come to a conclusion on Aston Martin Lagonda Global Holdings. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Aston Martin Lagonda Global Holdings analysts - going out to 2025, and you can see them free on our platform here.
Even so, be aware that Aston Martin Lagonda Global Holdings is showing 3 warning signs in our investment analysis , and 1 of those is concerning...
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