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Manhattan Associates, Inc. (NASDAQ:MANH) just released its third-quarter report and things are looking bullish. It was overall a positive result, with revenues beating expectations by 7.9% to hit US$150m. Manhattan Associates also reported a statutory profit of US$0.39, which was an impressive 29% above what the analysts had forecast. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Taking into account the latest results, the most recent consensus for Manhattan Associates from eight analysts is for revenues of US$610.1m in 2021 which, if met, would be a satisfactory 3.0% increase on its sales over the past 12 months. Statutory earnings per share are forecast to descend 16% to US$1.10 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$621.1m and earnings per share (EPS) of US$1.27 in 2021. The analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a substantial drop in EPS estimates.
It might be a surprise to learn that the consensus price target was broadly unchanged at US$108, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Manhattan Associates, with the most bullish analyst valuing it at US$125 and the most bearish at US$69.00 per share. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
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. It's clear from the latest estimates that Manhattan Associates' rate of growth is expected to accelerate meaningfully, with the forecast 3.0% revenue growth noticeably faster than its historical growth of 1.1%p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to see revenue growth of 13% next year. It seems obvious that, while the future growth outlook is brighter than the recent past, Manhattan Associates is expected to grow slower than 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 Manhattan Associates. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Manhattan Associates' revenues are expected to perform worse than the wider industry. The consensus price target held steady at US$108, 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 Manhattan Associates. 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 Manhattan Associates going out to 2024, 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 Manhattan Associates that you need to be mindful of.
This article by Simply Wall St is general in nature. 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.
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