Last week, you might have seen that Aptiv PLC (NYSE:APTV) released its yearly result to the market. The early response was not positive, with shares down 2.6% to US$81.29 in the past week. It looks like a credible result overall - although revenues of US$20b were what the analysts expected, Aptiv surprised by delivering a (statutory) profit of US$10.39 per share, an impressive 29% above what was forecast. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Taking into account the latest results, the consensus forecast from Aptiv's 21 analysts is for revenues of US$21.5b in 2024. This reflects a satisfactory 7.2% improvement in revenue compared to the last 12 months. Statutory earnings per share are expected to plummet 59% to US$4.31 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$21.7b and earnings per share (EPS) of US$4.69 in 2024. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a minor downgrade to their earnings per share forecasts.
The consensus price target held steady at US$108, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. 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. The most optimistic Aptiv analyst has a price target of US$155 per share, while the most pessimistic values it at US$58.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
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 forecasts are more or less bullish relative to other companies in the industry. The period to the end of 2024 brings more of the same, according to the analysts, with revenue forecast to display 7.2% growth on an annualised basis. That is in line with its 7.8% annual growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 11% per year. So although Aptiv is expected to maintain its revenue growth rate, it's forecast to grow slower than the wider industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Aptiv. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse 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 Aptiv. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Aptiv analysts - going out to 2026, and you can see them free on our platform here.
However, before you get too enthused, we've discovered 3 warning signs for Aptiv (1 shouldn't be ignored!) that you should be aware of.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.