Earnings Miss: AAON, Inc. Missed EPS By 43% And Analysts Are Revising Their Forecasts

The analysts might have been a bit too bullish on AAON, Inc. (NASDAQ:AAON), given that the company fell short of expectations when it released its second-quarter results last week. It wasn't a great result overall - while revenue fell marginally short of analyst estimates at US$312m, statutory earnings missed forecasts by an incredible 43%, coming in at just US$0.19 per share. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

Trump has pledged to "unleash" American oil and gas and these 15 US stocks have developments that are poised to benefit.

Taking into account the latest results, the current consensus from AAON's six analysts is for revenues of US$1.35b in 2025. This would reflect a reasonable 7.6% increase on its revenue over the past 12 months. Statutory earnings per share are forecast to drop 10% to US$1.35 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$1.40b and earnings per share (EPS) of US$2.01 in 2025. The analysts seem less optimistic after the recent results, reducing their revenue forecasts and making a large cut to earnings per share numbers.

View our latest analysis for AAON

The consensus price target fell 7.0% to US$95.75, with the weaker earnings outlook clearly leading valuation estimates. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic AAON analyst has a price target of US$105 per share, while the most pessimistic values it at US$85.00. This is a very narrow spread of estimates, implying either that AAON is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

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. We would highlight that AAON's revenue growth is expected to slow, with the forecast 16% annualised growth rate until the end of 2025 being well below the historical 22% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 5.3% annually. So it's pretty clear that, while AAON's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

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. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster 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.

With that in mind, we wouldn't be too quick to come to a conclusion on AAON. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple AAON analysts - going out to 2027, and you can see them free on our platform here.

You still need to take note of risks, for example - AAON has 3 warning signs (and 1 which makes us a bit uncomfortable) we think you should know about.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.