Last week, you might have seen that MSA Safety Incorporated (NYSE:MSA) released its annual result to the market. The early response was not positive, with shares down 5.8% to US$132 in the past week. It was not a great result overall. While revenues of US$1.4b were in line with analyst predictions, earnings were less than expected, missing statutory estimates by 16% to hit US$3.48 per share. 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. So we gathered the latest post-earnings forecasts to see what analysts' statutory forecasts suggest is in store for next year.
Taking into account the latest results, the latest consensus from MSA Safety's dual analysts is for revenues of US$1.44b in 2020, which would reflect a credible 2.4% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to bounce 41% to US$4.98. In the lead-up to this report, analysts had been modelling revenues of US$1.47b and earnings per share (EPS) of US$4.99 in 2020. So it looks like analysts have become a bit less optimistic after the latest results announcement, with revenues expected to fall even as the company is expected to maintain EPS.
The average price target was steady at US$129 even though revenue estimates declined; likely suggesting analysts place a higher value on earnings.
It can be useful to take a broader overview by seeing how analyst forecasts compare, both to the MSA Safety's past performance and to peers in the same market. It's pretty clear that analysts expect MSA Safety's revenue growth will slow down substantially, with revenues next year expected to grow 2.4%, compared to a historical growth rate of 5.0% over the past five years. Compare this against other companies (with analyst forecasts) in the market, which are in aggregate expected to see revenue growth of 5.1% next year. So it's pretty clear that, while revenue growth is expected to slow down, analysts still expect the wider market to grow faster than MSA Safety.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider market. Still, earnings are more important to the long-term value of the business. 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.
Still, the long-term prospects of the business are much more relevant than next year's earnings. At least one analyst has provided forecasts out to 2021, which can be seen for free on our platform here.
You can also see whether MSA Safety is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
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