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Results: MGP Ingredients, Inc. Exceeded Expectations And The Consensus Has Updated Its Estimates

Simply Wall St
·3 min read

MGP Ingredients, Inc. (NASDAQ:MGPI) just released its third-quarter report and things are looking bullish. It was overall a positive result, with revenues beating expectations by 7.3% to hit US$103m. MGP Ingredients reported statutory earnings per share (EPS) US$0.61, which was a notable 15% above what the analysts had forecast. This is an important time for investors, as they can track a company's performance in its report, look at what experts 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 the analysts latest (statutory) post-earnings forecasts for next year.

View our latest analysis for MGP Ingredients

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Taking into account the latest results, the current consensus from MGP Ingredients' five analysts is for revenues of US$417.5m in 2021, which would reflect a credible 7.9% increase on its sales over the past 12 months. Per-share earnings are expected to increase 2.9% to US$2.51. Before this earnings report, the analysts had been forecasting revenues of US$403.8m and earnings per share (EPS) of US$2.45 in 2021. So there seems to have been a moderate uplift in sentiment following the latest results, given the upgrades to both revenue and earnings per share forecasts for next year.

With these upgrades, we're not surprised to see that the analysts have lifted their price target 8.3% to US$49.40per share. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on MGP Ingredients, with the most bullish analyst valuing it at US$55.00 and the most bearish at US$42.00 per share. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that MGP Ingredients' rate of growth is expected to accelerate meaningfully, with the forecast 7.9% revenue growth noticeably faster than its historical growth of 4.1%p.a. over the past five years. Other similar companies in the industry (with analyst coverage) are also forecast to grow their revenue at 6.6% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that MGP Ingredients is expected to grow at about the same rate as the wider industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards MGP Ingredients following these results. They also upgraded their revenue forecasts, although the latest estimates suggest that MGP Ingredients will grow in line with the overall industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple MGP Ingredients analysts - going out to 2023, and you can see them free on our platform here.

Plus, you should also learn about the 1 warning sign we've spotted with MGP Ingredients .

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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