Earnings Miss: Arlo Technologies, Inc. Missed EPS And Analysts Are Revising Their Forecasts

It's been a sad week for Arlo Technologies, Inc. (NYSE:ARLO), who've watched their investment drop 12% to US$11.44 in the week since the company reported its quarterly result. Things were not great overall, with a surprise (statutory) loss of US$0.10 per share on revenues of US$124m, even though the analysts had been expecting a profit. 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've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

See our latest analysis for Arlo Technologies

Taking into account the latest results, the most recent consensus for Arlo Technologies from five analysts is for revenues of US$525.4m in 2024. If met, it would imply a reasonable 4.2% increase on its revenue over the past 12 months. Arlo Technologies is also expected to turn profitable, with statutory earnings of US$0.27 per share. Before this latest report, the consensus had been expecting revenues of US$530.6m and US$0.017 per share in losses. While there's been no material change to the revenue estimates, there's been a pretty clear upgrade to earnings estimates, with the analysts expecting a per-share profit compared to previous expectations of a loss. So it seems like the latest results have led to a significant increase in sentiment for Arlo Technologies.

The consensus price target was unchanged at US$15.35, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Arlo Technologies, with the most bullish analyst valuing it at US$17.00 and the most bearish at US$13.75 per share. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Arlo Technologies is an easy business to forecast or the the analysts are all using similar assumptions.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We can infer from the latest estimates that forecasts expect a continuation of Arlo Technologies'historical trends, as the 5.6% annualised revenue growth to the end of 2024 is roughly in line with the 6.9% annual growth over the past five years. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 6.2% annually. It's clear that while Arlo Technologies' revenue growth is expected to continue on its current trajectory, it's only expected to grow in line with the industry itself.

The Bottom Line

The most important thing to take away is that the analysts now expect Arlo Technologies to become profitable next year, compared to previous expectations that it would report a loss. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as 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.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Arlo Technologies analysts - going out to 2025, and you can see them free on our platform here.

And what about risks? Every company has them, and we've spotted 1 warning sign for Arlo Technologies you should know about.

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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.