It's been a mediocre week for Maple Leaf Foods Inc. (TSE:MFI) shareholders, with the stock dropping 12% to CA$22.38 in the week since its latest yearly results. Revenues of CA$3.9b were in line with forecasts, although statutory earnings per share (EPS) came in below expectations at CA$0.60, missing estimates by 4.8%. Earnings are an important time for investors, as they can track a company's performance, look at what top analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. With this in mind, we've gathered the latest statutory forecasts to see what analysts are expecting for next year.
After the latest results, the four analysts covering Maple Leaf Foods are now predicting revenues of CA$4.27b in 2020. If met, this would reflect a decent 8.4% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to jump 36% to CA$0.82. In the lead-up to this report, analysts had been modelling revenues of CA$4.11b and earnings per share (EPS) of CA$1.97 in 2020. So it's pretty clear analysts have mixed opinions on Maple Leaf Foods after the latest results; even though they upped their revenue numbers, it came at the cost of a pretty serious reduction to per-share earnings expectations.
The consensus price target was unchanged at CA$31.44, suggesting the business is performing roughly in line with expectations, despite some adjustments to profit and revenue forecasts. 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 Maple Leaf Foods, with the most bullish analyst valuing it at CA$38.00 and the most bearish at CA$24.00 per share. 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.
Another way to assess these estimates is by comparing them to past performance, and seeing whether analysts are more or less bullish relative to other companies in the market. Analysts are definitely expecting Maple Leaf Foods's growth to accelerate, with the forecast 8.4% growth ranking favourably alongside historical growth of 3.5% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 3.9% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Maple Leaf Foods is expected to grow much faster than its market.
The Bottom Line
The most important thing to take away is that analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Pleasantly, analysts also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster 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.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for Maple Leaf Foods going out to 2022, and you can see them free on our platform here..
You can also see whether Maple Leaf Foods is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
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