Earnings Miss: Adient plc Missed EPS And Analysts Are Revising Their Forecasts

It's been a mediocre week for Adient plc (NYSE:ADNT) shareholders, with the stock dropping 15% to US$21.28 in the week since its latest third-quarter results. Revenues fell 2.9% short of expectations, at US$3.7b. Earnings correspondingly dipped, with Adient reporting a statutory loss of US$0.12 per share, whereas the analysts had previously modelled a profit in this period. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

Check out our latest analysis for Adient

Following last week's earnings report, Adient's ten analysts are forecasting 2025 revenues to be US$15.0b, approximately in line with the last 12 months. Statutory earnings per share are predicted to bounce 154% to US$2.15. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$15.2b and earnings per share (EPS) of US$2.58 in 2025. So there's definitely been a decline in sentiment after the latest results, noting the real cut to new EPS forecasts.

It might be a surprise to learn that the consensus price target fell 8.5% to US$33.20, with the analysts clearly linking lower forecast earnings to the performance of the stock price. 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 Adient analyst has a price target of US$68.00 per share, while the most pessimistic values it at US$24.00. 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. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Adient's past performance and to peers in the same industry. From these estimates it looks as though the analysts expect the years of declining revenue to come to an end, given the flat forecast out to 2025. That would be a definite improvement, given that the past five years have seen revenue shrink 0.3% annually. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 9.7% per year. So it's pretty clear that, although revenues are improving, Adient is still expected to grow slower than the 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. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Adient's revenue is expected to 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.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Adient going out to 2026, and you can see them free on our platform here.

Plus, you should also learn about the 3 warning signs we've spotted with Adient (including 1 which doesn't sit too well with us) .

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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.