A week ago, MarineMax, Inc. (NYSE:HZO) came out with a strong set of third-quarter numbers that could potentially lead to a re-rate of the stock. Statutory earnings performance was extremely strong, with revenue of US$498m beating expectations by 20% and earnings per share (EPS) of US$1.58, an impressive 117%ahead of expectations. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Following last week's earnings report, MarineMax's eight analysts are forecasting 2021 revenues to be US$1.43b, approximately in line with the last 12 months. Statutory earnings per share are expected to sink 13% to US$2.25 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$1.35b and earnings per share (EPS) of US$1.59 in 2021. There's been a pretty noticeable increase in sentiment, with the analysts upgrading revenues and making a very substantial lift in earnings per share in particular.
It will come as no surprise to learn that the analysts have increased their price target for MarineMax 31% to US$32.25on the back of these upgrades. 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. There are some variant perceptions on MarineMax, with the most bullish analyst valuing it at US$34.00 and the most bearish at US$30.00 per share. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting MarineMax is an easy business to forecast or the the analysts are all using similar assumptions.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's pretty clear that there is an expectation that MarineMax's revenue growth will slow down substantially, with revenues next year expected to grow 0.7%, compared to a historical growth rate of 12% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 9.8% per year. Factoring in the forecast slowdown in growth, it seems obvious that MarineMax is also expected to grow slower than other industry participants.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards MarineMax following these results. They also upgraded their revenue estimates for next year, even though sales are expected to grow slower than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
With that in mind, we wouldn't be too quick to come to a conclusion on MarineMax. Long-term earnings power is much more important than next year's profits. We have forecasts for MarineMax going out to 2022, and you can see them free on our platform here.
And what about risks? Every company has them, and we've spotted 2 warning signs for MarineMax (of which 1 is a bit concerning!) you should know about.
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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