The Consensus EPS Estimates For Auckland International Airport Limited (NZSE:AIA) Just Fell A Lot

The latest analyst coverage could presage a bad day for Auckland International Airport Limited (NZSE:AIA), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon.

Following the downgrade, the most recent consensus for Auckland International Airport from its four analysts is for revenues of NZ$347m in 2022 which, if met, would be a meaningful 11% increase on its sales over the past 12 months. After this downgrade, the company is anticipated to report a loss of NZ$0.007 in 2022, a sharp decline from a profit over the last year. Previously, the analysts had been modelling revenues of NZ$417m and earnings per share (EPS) of NZ$0.041 in 2022. So we can see that the consensus has become notably more bearish on Auckland International Airport's outlook with these numbers, making a substantial drop in this year's revenue estimates. Furthermore, they expect the business to be loss-making this year, compared to their previous forecasts of a profit.

Check out our latest analysis for Auckland International Airport

The consensus price target was broadly unchanged at NZ$7.54, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation. 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. Currently, the most bullish analyst values Auckland International Airport at NZ$9.20 per share, while the most bearish prices it at NZ$6.60. 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 Auckland International Airport shareholders.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Auckland International Airport's past performance and to peers in the same industry. For example, we noticed that Auckland International Airport's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 11% growth to the end of 2022 on an annualised basis. That is well above its historical decline of 0.4% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 13% per year. So it looks like Auckland International Airport is expected to grow at about the same rate as the wider industry.

The Bottom Line

The biggest low-light for us was that the forecasts for Auckland International Airport dropped from profits to a loss this year. Lamentably, they also downgraded their sales forecasts, but the business is still expected to grow at roughly the same rate as the market itself. 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 Auckland International Airport after the downgrade.

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 Auckland International Airport analysts - going out to 2024, 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. 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.
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