Shareholders in Rekor Systems, Inc. (NASDAQ:REKR) had a terrible week, as shares crashed 45% to US$10.03 in the week since its latest quarterly results. The results don't look great, especially considering that statutory losses grew 67% toUS$0.15 per share. Revenues of US$4.2m did beat expectations by 5.4%, but it looks like a bit of a cold comfort. 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.
Taking into account the latest results, the current consensus from Rekor Systems' two analysts is for revenues of US$26.2m in 2021, which would reflect a major 121% increase on its sales over the past 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 45% to US$0.34. Before this latest report, the consensus had been expecting revenues of US$26.1m and US$0.22 per share in losses. While this year's revenue estimates held steady, there was also a massive increase in loss per share expectations, suggesting the consensus has a bit of a mixed view on the stock.
With the increase in forecast losses for next year, it's perhaps no surprise to see that the average price target dipped 11% to US$22.83, with the analysts signalling that growing losses would be a definite concern.
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. One thing stands out from these estimates, which is that Rekor Systems is forecast to grow faster in the future than it has in the past, with revenues expected to display 188% annualised growth until the end of 2021. If achieved, this would be a much better result than the 24% annual decline over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 7.1% per year. Not only are Rekor Systems' revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts increased their loss per share estimates for next year. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to 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.
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. At least one analyst has provided forecasts out to 2022, which can be seen for free on our platform here.
Before you take the next step you should know about the 3 warning signs for Rekor Systems (1 is a bit unpleasant!) that we have uncovered.
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Rekor Systems, Inc., through its subsidiaries, develops and implements transformative mission-critical intelligent infrastructure solutions and services for transportation management, public safety, and commercial markets in the United States, Canada, and internationally.
Adequate balance sheet with limited growth.