The analysts covering Columbus McKinnon Corporation (NASDAQ:CMCO) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for next year. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analysts have soured majorly on the business.
Following the latest downgrade, the current consensus, from the six analysts covering Columbus McKinnon, is for revenues of US$667m in 2021, which would reflect a stressful 20% reduction in Columbus McKinnon's sales over the past 12 months. Statutory earnings per share are anticipated to nosedive 68% to US$0.94 in the same period. Previously, the analysts had been modelling revenues of US$751m and earnings per share (EPS) of US$2.08 in 2021. It looks like analyst sentiment has declined substantially, with a measurable cut to revenue estimates and a pretty serious decline to earnings per share numbers as well.
The consensus price target fell 18% to US$32.17, with the weaker earnings outlook clearly leading analyst valuation estimates. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Columbus McKinnon analyst has a price target of US$40.00 per share, while the most pessimistic values it at US$22.00. 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.
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. These estimates imply that sales are expected to slow, with a forecast revenue decline of 20%, a significant reduction from annual growth of 11% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 0.6% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Columbus McKinnon is expected to lag the wider industry.
The Bottom Line
The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for Columbus McKinnon. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of Columbus McKinnon.
So things certainly aren't looking great, and you should also know that we've spotted some potential warning signs with Columbus McKinnon, including a weak balance sheet. Learn more, and discover the 2 other risks we've identified, for free on our platform here.
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