The analysts might have been a bit too bullish on AAON, Inc. (NASDAQ:AAON), given that the company fell short of expectations when it released its first-quarter results last week.      AAON missed analyst forecasts, with revenues of US$262m and statutory earnings per share (EPS) of US$0.46, falling short by 8.0% and 4.6% respectively.     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.  Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on AAON after the latest results.  

NasdaqGS:AAON Earnings and Revenue Growth May 5th 2024

Following the latest results, AAON's four analysts are now forecasting revenues of US$1.21b in 2024. This would be a credible 4.0% improvement in revenue compared to the last 12 months.       Statutory per share are forecast to be US$2.23, approximately in line with the last 12 months.        Before this earnings report, the analysts had been forecasting revenues of US$1.27b and earnings per share (EPS) of US$2.29 in 2024.        The analysts are less bullish than they were before these results, given the reduced revenue forecasts and the minor downgrade to earnings per share expectations.    

The average price target climbed 15% to US$94.67despite the reduced earnings forecasts, suggesting that this earnings impact could be a positive for the stock, once it passes.        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 AAON, with the most bullish analyst valuing it at US$102 and the most bearish at US$80.00 per share.   This is a very narrow spread of estimates, implying either that AAON is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.    

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the AAON's past performance and to peers in the same industry. It's pretty clear that there is an expectation that AAON's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 5.4% growth on an annualised basis. This is compared to a historical growth rate of 22% 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) 5.3% annually.  Factoring in the forecast slowdown in growth, it looks like AAON is forecast to grow at about the same rate as 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 AAON.        They also downgraded their revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider 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.  

With that said, the long-term trajectory of the company's earnings is a lot more important than next year.   At Simply Wall St, we have a full range of analyst estimates for AAON going out to 2025, and you can see them free on our platform here..

We don't want to rain on the parade too much, but we did also find 1 warning sign for AAON that you need to be mindful of.  

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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.