Verra Mobility Corporation Just Missed Earnings - But Analysts Have Updated Their Models

Investors in Verra Mobility Corporation (NASDAQ:VRRM) had a good week, as its shares rose 3.9% to close at US$22.88 following the release of its yearly results. It looks like a pretty bad result, all things considered. Although revenues of US$817m were in line with analyst predictions, statutory earnings fell badly short, missing estimates by 32% to hit US$0.36 per share. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

See our latest analysis for Verra Mobility

After the latest results, the seven analysts covering Verra Mobility are now predicting revenues of US$871.5m in 2024. If met, this would reflect a credible 6.6% improvement in revenue compared to the last 12 months. Per-share earnings are expected to leap 142% to US$0.83. Before this earnings report, the analysts had been forecasting revenues of US$859.5m and earnings per share (EPS) of US$0.84 in 2024. 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.

The consensus price target rose 5.4% to US$25.83despite there being no meaningful change to earnings estimates. It could be that the analystsare reflecting the predictability of Verra Mobility's earnings by assigning a price premium. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Verra Mobility at US$29.00 per share, while the most bearish prices it at US$21.00. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

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. It's pretty clear that there is an expectation that Verra Mobility's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 6.6% growth on an annualised basis. This is compared to a historical growth rate of 17% over the past five years. Compare this to the 151 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 6.4% per year. Factoring in the forecast slowdown in growth, it looks like Verra Mobility is forecast to grow at about the same rate as the wider industry.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Happily, there were no real changes to revenue forecasts, with the business still expected to grow in line with the overall industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Verra Mobility going out to 2026, and you can see them free on our platform here..

Don't forget that there may still be risks. For instance, we've identified 3 warning signs for Verra Mobility (1 makes us a bit uncomfortable) you should be aware 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.