Linamar Corporation Just Missed Earnings And Its EPS Looked Sad - But Analysts Have Updated Their Models
Linamar Corporation (TSE:LNR) came out with its full-year results last week, and we wanted to see how the business is performing and what top analysts think of the company following this report. It looks like the results were a bit of a negative overall. While revenues of CA$7.4b were in line with analyst predictions, statutory earnings were less than expected, missing estimates by 5.5% to hit CA$6.56 per share. This is an important time for investors, as they can track a company's performance in its report, look at what top analysts are forecasting for next year, and see if there has been any change to expectations for the business. With this in mind, we've gathered the latest statutory forecasts to see what analysts are expecting for next year.
See our latest analysis for Linamar
Taking into account the latest results, the five analysts covering Linamar provided consensus estimates of CA$7.02b revenue in 2020, which would reflect a noticeable 5.3% decline on its sales over the past 12 months. Statutory earnings per share are expected to rise 3.5% to CA$6.82. Before this earnings report, analysts had been forecasting revenues of CA$7.42b and earnings per share (EPS) of CA$6.97 in 2020. It's pretty clear that analyst sentiment has fallen after the latest results, leading to lower revenue forecasts and a minor downgrade to earnings per share estimates.
It'll come as no surprise then, to learn that analysts have cut their price target 19% to CA$43.00. 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 Linamar analyst has a price target of CA$57.00 per share, while the most pessimistic values it at CA$35.00. 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.
Further, we can compare these estimates to past performance, and see how Linamar forecasts compare to the wider market's forecast performance. These estimates imply that sales are expected to slow, with a forecast revenue decline of 5.3% a significant reduction from annual growth of 12% over the last five years. Compare this with our data, which suggests that other companies in the same market are, in aggregate, expected to see their revenue grow 4.0% next year. It's pretty clear that Linamar's revenues are expected to perform substantially worse than the wider market.
The Bottom Line
The biggest concern with the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Linamar. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider market. Analysts also downgraded their price target, suggesting that the latest news has led analysts to become more pessimistic about the intrinsic value of the business.
Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Linamar analysts - going out to 2022, and you can see them free on our platform here.
You can also view our analysis of Linamar's balance sheet, and whether we think Linamar is carrying too much debt, for free on our platform here.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.
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