As you might know, OPENLANE, Inc. (NYSE:KAR) recently reported its quarterly numbers. Results were overall in line with expectations, with the company breaking even at the statutory earnings per share (EPS) level on US$432m in revenue. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. 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 most recent consensus for OPENLANE from seven analysts is for revenues of US$1.69b in 2024. If met, it would imply a reasonable 2.2% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to jump 403% to US$0.43. In the lead-up to this report, the analysts had been modelling revenues of US$1.68b and earnings per share (EPS) of US$0.36 in 2024. Although the revenue estimates have not really changed, we can see there's been a nice gain to earnings per share expectations, suggesting that the analysts have become more bullish after the latest result.
The consensus price target was unchanged at US$19.83, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. 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. Currently, the most bullish analyst values OPENLANE at US$25.00 per share, while the most bearish prices it at US$17.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await OPENLANE shareholders.
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. For example, we noticed that OPENLANE's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 4.5% growth to the end of 2024 on an annualised basis. That is well above its historical decline of 12% a year 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 revenue grow 6.6% per year. Although OPENLANE's revenues are expected to improve, it seems that the analysts are still bearish on the business, forecasting it to grow slower than the broader industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around OPENLANE'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$19.83, with the latest estimates not enough to have an impact on their price targets.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for OPENLANE going out to 2025, and you can see them free on our platform here..
Before you take the next step you should know about the 1 warning sign for OPENLANE that we have uncovered.
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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.
