Forecast: Analysts Think M.P. Evans Group plc's (LON:MPE) Business Prospects Have Improved Drastically
M.P. Evans Group plc (LON:MPE) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's statutory forecasts. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with analysts modelling a real improvement in business performance. The market may be pricing in some blue sky too, with the share price gaining 10% to UK£6.85 in the last 7 days. Could this upgrade be enough to drive the stock even higher?
Following the upgrade, the latest consensus from M.P. Evans Group's twin analysts is for revenues of US$207m in 2021, which would reflect a decent 19% improvement in sales compared to the last 12 months. Per-share earnings are expected to shoot up 40% to US$0.53. Previously, the analysts had been modelling revenues of US$180m and earnings per share (EPS) of US$0.37 in 2021. So we can see there's been a pretty clear increase in analyst sentiment in recent times, with both revenues and earnings per share receiving a decent lift in the latest estimates.
See our latest analysis for M.P. Evans Group
Although the analysts have upgraded their earnings estimates, there was no change to the consensus price target of US$13.17, suggesting that the forecast performance does not have a long term impact on the company's valuation. 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. The most optimistic M.P. Evans Group analyst has a price target of US$10.00 per share, while the most pessimistic values it at US$9.12. This is a very narrow spread of estimates, implying either that M.P. Evans Group is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the M.P. Evans Group's past performance and to peers in the same industry. It's clear from the latest estimates that M.P. Evans Group's rate of growth is expected to accelerate meaningfully, with the forecast 19% annualised revenue growth to the end of 2021 noticeably faster than its historical growth of 15% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 5.4% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that M.P. Evans Group is expected to grow much faster than its industry.
The Bottom Line
The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for this year. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. Some investors might be disappointed to see that the price target is unchanged, but we feel that improving fundamentals are usually a positive - assuming these forecasts are met! So M.P. Evans Group could be a good candidate for more research.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have analyst estimates for M.P. Evans Group going out as far as 2023, and you can see them free on our platform here.
Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.
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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