Investors in a.k.a. Brands Holding Corp. (NYSE:AKA) had a good week, as its shares rose 5.7% to close at US$24.62 following the release of its third-quarter results. Revenues of US$150m beat expectations by a respectable 4.8%, although statutory losses per share increased. a.k.a. Brands Holding lost US$0.51, which was 159% more than what the analysts had included in their models. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Following the latest results, a.k.a. Brands Holding's four analysts are now forecasting revenues of US$594.5m in 2025. This would be a satisfactory 5.3% improvement in revenue compared to the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 97% to US$0.08. Before this earnings announcement, the analysts had been modelling revenues of US$584.4m and losses of US$0.88 per share in 2025. Although the revenue estimates have not really changed a.k.a. Brands Holding'sfuture looks a little different to the past, with a very favorable reduction to the loss per share forecasts in particular.
These new estimates led to the consensus price target rising 16% to US$26.00, with lower forecast losses suggesting things could be looking up for a.k.a. Brands Holding. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values a.k.a. Brands Holding at US$30.00 per share, while the most bearish prices it at US$20.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that a.k.a. Brands Holding's revenue growth is expected to slow, with the forecast 4.2% annualised growth rate until the end of 2025 being well below the historical 18% p.a. growth over the last five years. Compare this to the 148 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 4.8% per year. Factoring in the forecast slowdown in growth, it looks like a.k.a. Brands Holding 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 reconfirmed their loss per share estimates for next year. Happily, there were no real changes to revenue forecasts, with the business still expected to grow in line with the overall industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
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 forecasts for a.k.a. Brands Holding 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 2 warning signs for a.k.a. Brands Holding (of which 1 is potentially serious!) 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.
