One of the biggest stories of last week was how Motorcar Parts of America, Inc. (NASDAQ:MPAA) shares plunged 24% in the week since its latest third-quarter results, closing yesterday at US$10.03. Revenues of US$168m missed forecasts by 11%, but Motorcar Parts of America managed to deliver a surprise (statutory) profit, with earnings per share of US$0.09 a decent improvement on the loss that the analysts were predicting. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Motorcar Parts of America after the latest results.
Following the latest results, Motorcar Parts of America's dual analysts are now forecasting revenues of US$839.8m in 2027. This would be a notable 9.0% improvement in revenue compared to the last 12 months. Per-share earnings are expected to surge 344% to US$0.45. Before this earnings report, the analysts had been forecasting revenues of US$862.3m and earnings per share (EPS) of US$0.49 in 2027. 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.
View our latest analysis for Motorcar Parts of America
What's most unexpected is that the consensus price target rose 11% to US$20.00, strongly implying the downgrade to forecasts is not expected to be more than a temporary blip.
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. We can infer from the latest estimates that forecasts expect a continuation of Motorcar Parts of America'shistorical trends, as the 7.1% annualised revenue growth to the end of 2027 is roughly in line with the 6.7% annual growth 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 revenues grow 10% per year. So it's pretty clear that Motorcar Parts of America is expected to grow slower than similar companies in the same industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Motorcar Parts of America. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. 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. We have analyst estimates for Motorcar Parts of America going out as far as 2028, 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 1 warning sign with Motorcar Parts of America , and understanding this 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.