It's been a good week for AECOM (NYSE:ACM) shareholders, because the company has just released its latest yearly results, and the shares gained 2.5% to US$43.51. Revenues came in at US$20b, in line with estimates, while AECOM reported a loss of US$1.66 per share, well short of prior analyst forecasts for a profit. Earnings are an important time for investors, as they can track a company's performance, look at what top analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. With this in mind, we've gathered the latest forecasts to see what analysts are expecting for next year.
After the latest results, the consensus from AECOM's seven analysts is for revenues of US$19.7b in 2020, which would reflect a perceptible 2.2% decline in sales compared to the last year of performance. AECOM is also expected to turn profitable, with earnings of US$2.90 per share. Yet prior to the latest earnings, analysts had been forecasting revenues of US$20.8b and earnings per share (EPS) of US$2.91 in 2020. So it looks like analysts have become a bit less optimistic after the latest results announcement, with revenues expected to fall even as the company is expected to maintain EPS.
The average price target was steady at US$47.36 even though revenue estimates declined; likely suggesting analysts place a higher value on earnings. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic AECOM analyst has a price target of US$50.00 per share, while the most pessimistic values it at US$42.00. Still, with such a tight range of estimates, it suggests analysts have a pretty good idea of what they think the company is worth.
Further, we can compare these estimates to past performance, and see how AECOM forecasts compare to the wider market's forecast performance. These estimates imply that sales are expected to slow, with a forecast revenue decline of 2.2% a significant reduction from annual growth of 9.7% over the last five years. Compare this with our data, which suggests that other companies in the same market are, in aggregate, expected to see their revenue grow 4.7% next year. It's pretty clear that AECOM's revenues are expected to perform substantially worse than the wider market.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider market. Even so, earnings are more important to the intrinsic value of the business. 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 said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple AECOM analysts - going out to 2021, and you can see them free on our platform here.
You can also view our analysis of AECOM's balance sheet, and whether we think AECOM is carrying too much debt, for free on our platform here.
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