Liquidity Services, Inc. (NASDAQ:LQDT) defied analyst predictions to release its quarterly results, which were ahead of market expectations. It was a solid earnings report, with revenues and statutory earnings per share (EPS) both coming in strong. Revenues were 15% higher than the analysts had forecast, at US$91m, while EPS were US$0.18 beating analyst models by 29%. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the consensus forecast from Liquidity Services' dual analysts is for revenues of US$334.8m in 2024. This reflects an okay 3.5% improvement in revenue compared to the last 12 months. Statutory earnings per share are forecast to decline 12% to US$0.59 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$312.9m and earnings per share (EPS) of US$0.69 in 2024. So it's pretty clear the analysts have mixed opinions on Liquidity Services after the latest results; even though they upped their revenue numbers, it came at the cost of a substantial drop in per-share earnings expectations.
The analysts also upgraded Liquidity Services' price target 15% to US$27.50, implying that the higher revenue expected to generate enough value to offset the forecast decline in earnings.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Liquidity Services' past performance and to peers in the same industry. It's pretty clear that there is an expectation that Liquidity Services' revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 7.1% growth on an annualised basis. This is compared to a historical growth rate of 9.6% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 6.6% annually. Factoring in the forecast slowdown in growth, it looks like Liquidity Services is forecast to grow at about the same rate as the wider industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. There was also an upgrade to revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
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 analyst estimates for Liquidity Services going out as far as 2025, and you can see them free on our platform here.
Don't forget that there may still be risks. For instance, we've identified 2 warning signs for Liquidity Services that you should be aware of.
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