A week ago, Marcus & Millichap, Inc. (NYSE:MMI) came out with a strong set of quarterly numbers that could potentially lead to a re-rate of the stock. It was a solid earnings report, with revenues and statutory earnings per share (EPS) both coming in strong. Revenues were 19% higher than the analysts had forecast, at US$159m, while EPS were US$0.15 beating analyst models by 150%. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
After the latest results, the twin analysts covering Marcus & Millichap are now predicting revenues of US$729.6m in 2021. If met, this would reflect a credible 3.5% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to surge 29% to US$1.31. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$720.4m and earnings per share (EPS) of US$1.30 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 consensus price target rose 22% to US$28.00despite there being no meaningful change to earnings estimates. It could be that the analystsare reflecting the predictability of Marcus & Millichap's earnings by assigning a price premium.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We can infer from the latest estimates that forecasts expect a continuation of Marcus & Millichap'shistorical trends, as next year's 3.5% revenue growth is roughly in line with 3.1% annual revenue growth over the past five years. Compare this with the wider industry (in aggregate), which analyst estimates suggest will see revenues grow 16% next year. So it's pretty clear that Marcus & Millichap is expected to grow slower than similar companies in the same industry.
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. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At least one analyst has provided forecasts out to 2022, which can be seen for free on our platform here.
Even so, be aware that Marcus & Millichap is showing 1 warning sign in our investment analysis , you should know about...
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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