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OPENLANE, Inc. Just Missed EPS By 46%: Here's What Analysts Think Will Happen Next

OPENLANE, Inc. (NYSE:KAR) missed earnings with its latest quarterly results, disappointing overly-optimistic forecasters. Results showed a clear earnings miss, with US$416m revenue coming in 2.1% lower than what the analystsexpected. Statutory earnings per share (EPS) of US$0.05 missed the mark badly, arriving some 46% below what was expected. 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.

Check out our latest analysis for OPENLANE

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earnings-and-revenue-growth

After the latest results, the seven analysts covering OPENLANE are now predicting revenues of US$1.69b in 2024. If met, this would reflect a satisfactory 3.0% improvement in revenue compared to the last 12 months. OPENLANE is also expected to turn profitable, with statutory earnings of US$0.31 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$1.69b and earnings per share (EPS) of US$0.37 in 2024. So there's definitely been a decline in sentiment after the latest results, noting the substantial drop in new EPS forecasts.

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The consensus price target held steady at US$19.83, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on OPENLANE, with the most bullish analyst valuing it at US$25.00 and the most bearish at US$17.00 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. For example, we noticed that OPENLANE's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 4.0% growth to the end of 2024 on an annualised basis. That is well above its historical decline of 14% a year over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 6.9% annually for the foreseeable future. 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 concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for OPENLANE. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that OPENLANE's revenue is expected to 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.

With that in mind, we wouldn't be too quick to come to a conclusion on OPENLANE. Long-term earnings power is much more important than next year's profits. 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..

It is also worth noting that we have found 1 warning sign for OPENLANE that you need to take into consideration.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.