Shareholders of U.S. Auto Parts Network, Inc. (NASDAQ:PRTS) will be pleased this week, given that the stock price is up 13% to US$1.89 following its latest quarterly results. Revenues of US$69m were in line with expectations, although losses per share came were US$0.04, some 14% smaller than was expected. Following the result, 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 gathered the latest post-earnings forecasts to see what analysts are forecasting for next year.
Taking into account the latest results, the latest consensus from U.S. Auto Parts Network's dual analysts is for revenues of US$292m in 2020, which would reflect a reasonable 3.5% improvement in sales compared to the last 12 months. Losses are forecast to balloon 81% to US$0.06 per share. Yet prior to the latest earnings, analysts had been forecasting revenues of US$292m and losses of US$0.08 per share in 2020. There was no real change to the revenue estimates, but analysts do seem more bullish on earnings, given the sizeable expansion in earnings per share expectations following these results.
The consensus price target fell 7.1% to US$3.25 despite the forecast for smaller losses next year. It looks like the ongoing lack of profitability is starting to weigh on analyst valuations.
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 analysts are more or less bullish relative to other companies in the market. Analysts are definitely expecting U.S. Auto Parts Network's growth to accelerate, with the forecast 3.5% growth ranking favourably alongside historical growth of 0.2% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 17% per year. It seems obvious that, while the future growth outlook is brighter than the recent past, analysts also expect U.S. Auto Parts Network to grow slower than the wider market.
The Bottom Line
The most important thing to note from these estimates is that the consensus increased its forecast losses next year, suggesting all may not be well at U.S. Auto Parts Network. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that U.S. Auto Parts Network's revenues are expected to perform worse than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by the latest results, leading to a lower estimate of U.S. Auto Parts Network's future valuation.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At least one analyst has provided forecasts out to 2020, which can be seen for free on our platform here.
You can also see whether U.S. Auto Parts Network is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
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