Alto Ingredients, Inc. Just Missed EPS By 25%: Here's What Analysts Think Will Happen Next

Alto Ingredients, Inc. (NASDAQ:ALTO) shareholders are probably feeling a little disappointed, since its shares fell 3.1% to US$5.23 in the week after its latest quarterly results. Results overall were not great, with earnings of US$0.11 per share falling drastically short of analyst expectations. Meanwhile revenues hit US$298m and were slightly better than forecasts. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

Check out our latest analysis for Alto Ingredients

After the latest results, the twin analysts covering Alto Ingredients are now predicting revenues of US$1.06b in 2021. If met, this would reflect a solid 19% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to shoot up 404% to US$0.51. In the lead-up to this report, the analysts had been modelling revenues of US$1.09b and earnings per share (EPS) of US$0.61 in 2021. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a substantial drop in earnings per share estimates.

The analysts made no major changes to their price target of US$11.67, suggesting the downgrades are not expected to have a long-term impact on Alto Ingredients' valuation.

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. For example, we noticed that Alto Ingredients' rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 42% growth to the end of 2021 on an annualised basis. That is well above its historical decline of 11% a year over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 1.4% annually. Not only are Alto Ingredients' 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 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. The consensus price target held steady at US$11.67, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on Alto Ingredients. Long-term earnings power is much more important than next year's profits. We have analyst estimates for Alto Ingredients going out as far as 2022, and you can see them free on our platform here.

It is also worth noting that we have found 3 warning signs for Alto Ingredients that you need to take into consideration.

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This article by Simply Wall St is general in nature. 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.
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