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Mesa Laboratories, Inc. Just Recorded A 720% EPS Beat: Here's What Analysts Are Forecasting Next

Simply Wall St
·4 min read

Mesa Laboratories, Inc. (NASDAQ:MLAB) just released its quarterly report and things are looking bullish. It was overall a positive result, with revenues beating expectations by 5.2% to hit US$32m. Mesa Laboratories also reported a statutory profit of US$0.51, which was an impressive 720% above what the analysts had forecast. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

View our latest analysis for Mesa Laboratories

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Taking into account the latest results, Mesa Laboratories' three analysts currently expect revenues in 2021 to be US$128.6m, approximately in line with the last 12 months. Mesa Laboratories is also expected to turn profitable, with statutory earnings of US$0.70 per share. Before this earnings report, the analysts had been forecasting revenues of US$127.8m and earnings per share (EPS) of US$0.99 in 2021. The analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a pretty serious reduction to EPS estimates.

It might be a surprise to learn that the consensus price target was broadly unchanged at US$263, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on 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. There are some variant perceptions on Mesa Laboratories, with the most bullish analyst valuing it at US$290 and the most bearish at US$221 per share. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that Mesa Laboratories' revenue growth is expected to slow, with forecast 0.8% increase next year well below the historical 8.1%p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 9.9% per year. Factoring in the forecast slowdown in growth, it seems obvious that Mesa Laboratories is also expected to grow slower than other industry participants.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. 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.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Mesa Laboratories analysts - going out to 2023, and you can see them free on our platform here.

You should always think about risks though. Case in point, we've spotted 2 warning signs for Mesa Laboratories you should be aware of.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.