Workhorse Group Inc. (NASDAQ:WKHS) just released its latest quarterly report and things are not looking great. Statutory earnings fell substantially short of expectations, with revenues of US$565k missing forecasts by 69%. Losses exploded, with a per-share loss of US$0.78 some 665% below prior forecasts. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Workhorse Group after the latest results.
After the latest results, the five analysts covering Workhorse Group are now predicting revenues of US$130.0m in 2021. If met, this would reflect a huge 17,378% improvement in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 85% to US$0.41. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$138.7m and losses of US$0.29 per share in 2021. So it's pretty clear the analysts have mixed opinions on Workhorse Group after this update; revenues were downgraded and per-share losses expected to increase.
The consensus price target fell 11% to US$22.75, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook. 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. The most optimistic Workhorse Group analyst has a price target of US$26.00 per share, while the most pessimistic values it at US$19.00. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. For example, we noticed that Workhorse Group's rate of growth is expected to accelerate meaningfully, with revenues forecast to grow many times over, well above its historical decline of 16% a year over the past five years. Compare this against analyst estimates for the wider industry, which suggest that (in aggregate) industry revenues are expected to grow 12% next year. So it looks like Workhorse Group is expected to grow faster than its competitors, at least for a while.
The Bottom Line
The most important thing to take away is that the analysts increased their loss per share estimates for next year. They also downgraded their revenue estimates, although industry data suggests that Workhorse Group's revenues are expected to grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Workhorse Group's future valuation.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Workhorse Group going out to 2024, and you can see them free on our platform here.
Before you take the next step you should know about the 4 warning signs for Workhorse Group (2 are potentially serious!) that we have uncovered.
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