APi Group Corporation Just Recorded A 16% EPS Beat: Here's What Analysts Are Forecasting Next

APi Group Corporation (NYSE:APG) investors will be delighted, with the company turning in some strong numbers with its latest results. APi Group beat earnings, with revenues hitting US$1.6b, ahead of expectations, and statutory earnings per share outperforming analyst reckonings by a solid 16%. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

See our latest analysis for APi Group

Taking into account the latest results, the consensus forecast from APi Group's eight analysts is for revenues of US$6.96b in 2023, which would reflect an okay 3.9% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to surge 93% to US$0.46. Before this earnings report, the analysts had been forecasting revenues of US$6.89b and earnings per share (EPS) of US$0.45 in 2023. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

There's been no major changes to the consensus price target of US$27.40, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on APi Group, with the most bullish analyst valuing it at US$32.00 and the most bearish at US$21.00 per share. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that APi Group's revenue growth is expected to slow, with the forecast 5.2% annualised growth rate until the end of 2023 being well below the historical 35% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 7.5% annually. Factoring in the forecast slowdown in growth, it seems obvious that APi Group is also expected to grow slower than other industry participants.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards APi Group following these results. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that APi Group's revenues are expected to perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that in mind, we wouldn't be too quick to come to a conclusion on APi Group. Long-term earnings power is much more important than next year's profits. We have forecasts for APi Group going out to 2025, and you can see them free on our platform here.

We don't want to rain on the parade too much, but we did also find 2 warning signs for APi Group (1 is a bit concerning!) that you need to be mindful of.

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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.