Malibu Boats, Inc. (NASDAQ:MBUU) investors will be delighted, with the company turning in some strong numbers with its latest results. The company beat both earnings and revenue forecasts, with revenue of US$180m, some 9.7% above estimates, and statutory earnings per share (EPS) coming in at US$0.81, 30% ahead of expectations. This is an important time for investors, as they can track a company's performance in its report, look at what top analysts are forecasting for next year, and see if there has been any change to expectations for the business. We thought readers would find it interesting to see analysts' latest (statutory) post-earnings forecasts for next year.
Following last week's earnings report, Malibu Boats's seven analysts are forecasting 2020 revenues to be US$748.4m, approximately in line with the last 12 months. Statutory earnings per share are expected to accumulate 6.5% to US$3.74. In the lead-up to this report, analysts had been modelling revenues of US$738.7m and earnings per share (EPS) of US$3.66 in 2020. Analysts seem to have become more bullish on the business, judging by their new earnings per share estimates.
The consensus price target rose 14% to US$55.67, suggesting that higher earnings estimates flow through to the stock's valuation as well. 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. Currently, the most bullish analyst values Malibu Boats at US$60.00 per share, while the most bearish prices it at US$50.00. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that analysts have a clear view on its prospects.
Another way to assess these estimates is by comparing them to past performance, and seeing whether analysts are more or less bullish relative to other companies in the market. We would highlight that Malibu Boats's revenue growth is expected to slow, with forecast 0.2% increase next year well below the historical 28%p.a. growth over the last five years. By way of comparison, other companies in this market with analyst coverage, are forecast to grow their revenue at 13% per year. Factoring in the forecast slowdown in growth, it seems obvious that analysts still expect Malibu Boats to grow slower than the wider market.
The Bottom Line
The biggest takeaway for us from these new estimates is that the consensus upgraded its earnings per share estimates, showing a clear improvement in sentiment around Malibu Boats's earnings potential next year. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Malibu Boats's revenues are expected to perform worse than the wider market. There was also a nice increase in the price target, with analysts feeling that the intrinsic value of the business is improving.
With that in mind, we wouldn't be too quick to come to a conclusion on Malibu Boats. Long-term earnings power is much more important than next year's profits. We have forecasts for Malibu Boats going out to 2022, and you can see them free on our platform here.
It might also be worth considering whether Malibu Boats's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
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