The Aaron's Company, Inc. Beat Analyst Estimates: See What The Consensus Is Forecasting For This Year

The Aaron's Company, Inc. (NYSE:AAN) investors will be delighted, with the company turning in some strong numbers with its latest results. It was a solid earnings report, with revenues and statutory earnings per share (EPS) both coming in strong. Revenues were 12% higher than the analysts had forecast, at US$481m, while EPS were US$1.04 beating analyst models by 86%. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Aaron's Company after the latest results.

View our latest analysis for Aaron's Company

Following last week's earnings report, Aaron's Company's nine analysts are forecasting 2021 revenues to be US$1.76b, approximately in line with the last 12 months. Earnings are expected to improve, with Aaron's Company forecast to report a statutory profit of US$2.59 per share. In the lead-up to this report, the analysts had been modelling revenues of US$1.68b and earnings per share (EPS) of US$1.87 in 2021. So it seems there's been a definite increase in optimism about Aaron's Company's future following the latest results, with a sizeable expansion in the earnings per share forecasts in particular.

With these upgrades, we're not surprised to see that the analysts have lifted their price target 11% to US$28.57per share. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Aaron's Company at US$37.00 per share, while the most bearish prices it at US$20.00. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 1.5% by the end of 2021. This indicates a significant reduction from annual growth of 0.8% over the last year. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 11% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Aaron's Company is expected to lag the wider industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Aaron's Company following these results. Fortunately, they also upgraded their revenue estimates, although our data indicates sales are expected to perform worse than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

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 Aaron's Company going out to 2025, and you can see them free on our platform here.

You should always think about risks though. Case in point, we've spotted 4 warning signs for Aaron's Company you should be aware of, and 1 of them is a bit unpleasant.

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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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