AMETEK, Inc. (NYSE:AME) last week reported its latest full-year results, which makes it a good time for investors to dive in and see if the business is performing in line with expectations. It was a credible result overall, with revenues of US$5.2b and statutory earnings per share of US$3.75 both in line with analyst estimates, showing that AMETEK is executing in line with expectations. Following the result, 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 analysts have changed their mind on AMETEK after the latest results.
Following the latest results, AMETEK's 17 analysts are now forecasting revenues of US$5.27b in 2020. This would be a credible 2.1% improvement in sales compared to the last 12 months. Statutory per-share earnings are expected to be US$3.83, roughly flat on the last 12 months. Yet prior to the latest earnings, analysts had been forecasting revenues of US$5.26b and earnings per share (EPS) of US$3.84 in 2020. So it's pretty clear that, although analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
It will come as no surprise then, to learn that the consensus price target is largely unchanged at US$108. 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 AMETEK, with the most bullish analyst valuing it at US$125 and the most bearish at US$88.00 per share. This shows there is still quite a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
Zooming out to look at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up both against past performance, and against industry growth estimates. It's pretty clear that analysts expect AMETEK's revenue growth will slow down substantially, with revenues next year expected to grow 2.1%, compared to a historical growth rate of 6.1% over the past five years. By way of comparison, other companies in this market with analyst coverage, are forecast to grow their revenue at 2.8% per year. Factoring in the forecast slowdown in growth, it seems obvious that analysts still expect AMETEK to grow slower than the wider market.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that AMETEK's revenues are expected to perform worse than the wider market. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Still, the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for AMETEK going out to 2022, and you can see them free on our platform here.
You can also see whether AMETEK is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
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