The quarterly results for Aptiv PLC (NYSE:APTV) were released last week, making it a good time to revisit its performance. Revenues of US$5.1b fell slightly short of expectations, but earnings were a definite bright spot, with statutory per-share profits of US$3.47 an impressive 232% ahead of estimates. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
See our latest analysis for Aptiv
After the latest results, the 22 analysts covering Aptiv are now predicting revenues of US$20.7b in 2024. If met, this would reflect an okay 3.6% improvement in revenue compared to the last 12 months. Statutory earnings per share are expected to tumble 48% to US$7.18 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$21.0b and earnings per share (EPS) of US$4.55 in 2024. There was no real change to the revenue estimates, but the analysts do seem more bullish on earnings, given the considerable lift to earnings per share expectations following these results.
There’s been no major changes to the consensus price target of US$93.89, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock’s valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company’s valuation. There are some variant perceptions on Aptiv, with the most bullish analyst valuing it at US$147 and the most bearish at US$62.00 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that Aptiv’s revenue growth is expected to slow, with the forecast 7.2% annualised growth rate until the end of 2024 being well below the historical 9.4% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 10% annually. So it’s pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Aptiv.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Aptiv’s earnings potential next year. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. The consensus price target held steady at US$93.89, with the latest estimates not enough to have an impact on their price targets.
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 forecasts for Aptiv 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 2 warning signs with Aptiv (at least 1 which shouldn’t be ignored) , and understanding them 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com