It's been a pretty great week for Mondi plc (LON:MNDI) shareholders, with its shares surging 12% to UK£13.87 in the week since its latest yearly results. Revenues came in 2.9% below expectations, at €7.3b. Statutory earnings per share were relatively better off, with a per-share profit of €1.68 being roughly in line with analyst estimates. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Taking into account the latest results, the current consensus, from the 13 analysts covering Mondi, is for revenues of €7.11b in 2020, which would reflect a noticeable 2.2% reduction in Mondi's sales over the past 12 months. Statutory earnings per share are expected to decline 18% to €1.38 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of €7.16b and earnings per share (EPS) of €1.41 in 2020. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
It will come as no surprise then, to learn that the consensus price target is largely unchanged at €21.84. 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. Currently, the most bullish analyst values Mondi at €27.10 per share, while the most bearish prices it at €16.33. 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.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Mondi's past performance and to peers in the same industry. We would highlight that sales are expected to reverse, with the forecast 2.2% revenue decline a notable change from historical growth of 3.0% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 0.7% next year. It's pretty clear that Mondi's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Mondi's revenues are expected to perform worse than the wider industry. The consensus price target held steady at €21.84, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn't be too quick to come to a conclusion on Mondi. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Mondi going out to 2022, and you can see them free on our platform here..
However, before you get too enthused, we've discovered 3 warning signs for Mondi that you should be aware of.
If you spot an error that warrants correction, please contact the editor at email@example.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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.