MedMen Enterprises Inc. (CSE:MMEN) just released its latest quarterly report and things are not looking great. Revenues missed expectations somewhat, coming in at US$46m, but statutory earnings fell catastrophically short, with a loss of US$0.13 some 73% larger than what the analysts had predicted. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Taking into account the latest results, the most recent consensus for MedMen Enterprises from six analysts is for revenues of US$233.2m in 2021 which, if met, would be a major 32% increase on its sales over the past 12 months. Losses are predicted to fall substantially, shrinking 77% to US$0.10. Before this latest report, the consensus had been expecting revenues of US$286.1m and US$0.058 per share in losses. So there's been quite a change-up of views after the recent consensus updates, withthe analysts making a serious cut to their revenue outlook while also expecting losses per share to increase.
There was no major change to the consensus price target of US$0.32, signalling that the business is performing roughly in line with expectations, despite lower earnings per share forecasts. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic MedMen Enterprises analyst has a price target of US$0.75 per share, while the most pessimistic values it at US$0.25. With such a wide range in price targets, analysts are almost certainly betting on widely divergent outcomes in the underlying business. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.
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. We would highlight that MedMen Enterprises' revenue growth is expected to slow, with forecast 32% increase next year well below the historical 91%p.a. growth over the last three years. Compare this to the 156 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 33% per year. So it's pretty clear that, while MedMen Enterprises' revenue growth is expected to slow, it's expected to grow roughly in line with the industry.
The Bottom Line
The most important thing to take away is that the analysts increased their loss per share estimates for next year. Sadly, they also downgraded their sales forecasts, but the business is still expected to grow at roughly the same rate as the industry itself. 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.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple MedMen Enterprises analysts - going out to 2023, and you can see them free on our platform here.
You still need to take note of risks, for example - MedMen Enterprises has 2 warning signs we think you should be aware of.
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