MYR Group Inc. Just Beat EPS By 15%: Here's What Analysts Think Will Happen Next
It's been a pretty great week for MYR Group Inc. (NASDAQ:MYRG) shareholders, with its shares surging 14% to US$30.00 in the week since its latest quarterly results. Revenues disappointed slightly, as sales of US$518m were 5.2% below what the analysts had predicted. Profits were a relative bright spot, with statutory per-share earnings of US$0.59 coming in 15% above what was anticipated. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Check out our latest analysis for MYR Group
Taking into account the latest results, MYR Group's four analysts currently expect revenues in 2020 to be US$2.13b, approximately in line with the last 12 months. Statutory earnings per share are forecast to shrink 3.0% to US$2.35 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$2.30b and earnings per share (EPS) of US$2.71 in 2020. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a substantial drop in earnings per share estimates.
The analysts made no major changes to their price target of US$34.50, suggesting the downgrades are not expected to have a long-term impact on MYR Group'svaluation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values MYR Group at US$44.00 per share, while the most bearish prices it at US$21.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that MYR Group's revenue growth is expected to slow, with forecast 0.3% increase next year well below the historical 16%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 1.4% 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 MYR Group.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for MYR Group. Unfortunately, they also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target held steady at US$34.50, 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 MYR Group. Long-term earnings power is much more important than next year's profits. We have forecasts for MYR Group going out to 2022, and you can see them free on our platform here.
However, before you get too enthused, we've discovered 2 warning signs for MYR Group that you should be aware of.
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