Mullen Group Ltd. (TSE:MTL) investors will be delighted, with the company turning in some strong numbers with its latest results. It was overall a positive result, with revenues beating expectations by 2.1% to hit CA$258m. Mullen Group also reported a statutory profit of CA$0.23, which was an impressive 475% above what the analysts had forecast. 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've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Taking into account the latest results, the ten analysts covering Mullen Group provided consensus estimates of CA$1.13b revenue in 2020, which would reflect a small 7.1% decline on its sales over the past 12 months. Statutory per-share earnings are expected to be CA$0.54, roughly flat on the last 12 months. In the lead-up to this report, the analysts had been modelling revenues of CA$1.12b and earnings per share (EPS) of CA$0.23 in 2020. Although the revenue estimates have not really changed, we can see there's been a great increase in earnings per share expectations, suggesting that the analysts have become more bullish after the latest result.
The consensus price target rose 19% to CA$10.68, suggesting that higher earnings estimates flow through to the stock's valuation as well. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Mullen Group analyst has a price target of CA$12.50 per share, while the most pessimistic values it at CA$8.00. 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 Mullen Group's past performance and to peers in the same industry. These estimates imply that sales are expected to slow, with a forecast revenue decline of 7.1%, a significant reduction from annual growth of 2.0% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 5.6% annually for the foreseeable future. It's pretty clear that Mullen Group's revenues are expected to perform substantially worse than 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 Mullen Group following these results. 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.
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. At Simply Wall St, we have a full range of analyst estimates for Mullen Group going out to 2022, and you can see them free on our platform here..
Before you take the next step you should know about the 4 warning signs for Mullen Group (1 is a bit concerning!) that we have uncovered.
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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