AAON, Inc. (NASDAQ:AAON) just released its third-quarter report and things are looking bullish. AAON delivered a significant beat to revenue and earnings per share (EPS) expectations, with sales hitting US$135m, some 13% above indicated. Statutory EPS were US$0.38, an impressive 25% ahead of forecasts. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on AAON after the latest results.
After the latest results, the consensus from AAON's twin analysts is for revenues of US$482.0m in 2021, which would reflect a measurable 7.4% decline in sales compared to the last year of performance. Statutory earnings per share are expected to fall 19% to US$1.20 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$475.0m and earnings per share (EPS) of US$1.22 in 2021. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
With no major changes to earnings forecasts, the consensus price target fell 18% to US$35.00, suggesting that the analysts might have previously been hoping for an earnings upgrade.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. These estimates imply that sales are expected to slow, with a forecast revenue decline of 7.4%, a significant reduction from annual growth of 7.3% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 4.8% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - AAON is expected to lag the wider industry.
The Bottom Line
The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse 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 AAON'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 analyst estimates for AAON going out as far as 2022, and you can see them free on our platform here.
And what about risks? Every company has them, and we've spotted 2 warning signs for AAON (of which 1 is significant!) you should know about.
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