SmartRent, Inc. (NYSE:SMRT) Analysts Are Cutting Their Estimates: Here's What You Need To Know

SmartRent, Inc. (NYSE:SMRT) shareholders are probably feeling a little disappointed, since its shares fell 4.8% to US$2.76 in the week after its latest annual results. The results overall were pretty much dead in line with analyst forecasts; revenues were US$237m and statutory losses were US$0.17 per share. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

Check out our latest analysis for SmartRent

After the latest results, the eight analysts covering SmartRent are now predicting revenues of US$273.0m in 2024. If met, this would reflect a solid 15% improvement in revenue compared to the last 12 months. Per-share statutory losses are expected to explode, reaching US$0.024 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$289.3m and earnings per share (EPS) of US$0.014 in 2024. There looks to have been a significant drop in sentiment regarding SmartRent's prospects after these latest results, with a small dip in revenues and the analysts now forecasting a loss instead of a profit.

The average price target was broadly unchanged at US$4.41, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on SmartRent, with the most bullish analyst valuing it at US$6.00 and the most bearish at US$3.20 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

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. We would highlight that SmartRent's revenue growth is expected to slow, with the forecast 15% annualised growth rate until the end of 2024 being well below the historical 45% 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 5.3% annually. So it's pretty clear that, while SmartRent's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The most important thing to take away is that the analysts are expecting SmartRent to become unprofitable next year. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that in mind, we wouldn't be too quick to come to a conclusion on SmartRent. Long-term earnings power is much more important than next year's profits. We have forecasts for SmartRent going out to 2026, and you can see them free on our platform here.

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with SmartRent , and understanding this should be part of your investment process.

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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.