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As you might know, Mueller Water Products, Inc. (NYSE:MWA) just kicked off its latest first-quarter results with some very strong numbers. The company beat both earnings and revenue forecasts, with revenue of US$237m, some 9.5% above estimates, and statutory earnings per share (EPS) coming in at US$0.11, 38% 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Following last week's earnings report, Mueller Water Products' eight analysts are forecasting 2021 revenues to be US$999.3m, approximately in line with the last 12 months. Statutory earnings per share are predicted to expand 11% to US$0.55. Before this earnings report, the analysts had been forecasting revenues of US$992.7m and earnings per share (EPS) of US$0.55 in 2021. 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.
The analysts reconfirmed their price target of US$13.33, showing that the business is executing well and in line with expectations. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Mueller Water Products analyst has a price target of US$16.00 per share, while the most pessimistic values it at US$11.50. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Mueller Water Products' past performance and to peers in the same industry. We would highlight that Mueller Water Products' revenue growth is expected to slow, with forecast 1.1% increase next year well below the historical 2.4%p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 7.5% next year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Mueller Water Products.
The Bottom Line
The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. 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.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Mueller Water Products 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 1 warning sign for Mueller Water Products 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.
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