Earnings Beat: American Outdoor Brands, Inc. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models

It's been a mediocre week for American Outdoor Brands, Inc. (NASDAQ:AOUT) shareholders, with the stock dropping 17% to US$28.04 in the week since its latest full-year results. Revenues were US$277m, approximately in line with expectations, although statutory earnings per share (EPS) performed substantially better. EPS of US$1.29 were also better than expected, beating analyst predictions by 17%. 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.

View our latest analysis for American Outdoor Brands

Taking into account the latest results, American Outdoor Brands' four analysts currently expect revenues in 2022 to be US$278.2m, approximately in line with the last 12 months. Statutory earnings per share are expected to fall 16% to US$1.10 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$278.2m and earnings per share (EPS) of US$1.10 in 2022. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.

There were no changes to revenue or earnings estimates or the price target of US$40.40, suggesting that the company has met expectations in its recent result. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic American Outdoor Brands analyst has a price target of US$44.00 per share, while the most pessimistic values it at US$36.00. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.

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 American Outdoor Brands' revenue growth is expected to slow, with the forecast 0.6% annualised growth rate until the end of 2022 being well below the historical 14% p.a. growth over the last three years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 12% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than American Outdoor Brands.

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. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that American Outdoor Brands' revenues are expected to perform worse than the wider industry. The consensus price target held steady at US$40.40, with the latest estimates not enough to have an impact on their price targets.

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 forecasts for American Outdoor Brands going out to 2024, 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 1 warning sign for American Outdoor Brands that you need to be mindful of.

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