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Steven Madden, Ltd. (NASDAQ:SHOO) 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 6.1% to hit US$395m. Steven Madden also reported a statutory profit of US$0.45, which was an impressive 57% above what the analysts had forecast. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Taking into account the latest results, the current consensus from Steven Madden's nine analysts is for revenues of US$1.75b in 2021, which would reflect a notable 20% increase on its sales over the past 12 months. Per-share earnings are expected to jump 113% to US$1.99. In the lead-up to this report, the analysts had been modelling revenues of US$1.64b and earnings per share (EPS) of US$1.67 in 2021. So it seems there's been a definite increase in optimism about Steven Madden's future following the latest results, with a decent improvement in the earnings per share forecasts in particular.
With these upgrades, we're not surprised to see that the analysts have lifted their price target 8.2% to US$47.88per share. 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. There are some variant perceptions on Steven Madden, with the most bullish analyst valuing it at US$57.00 and the most bearish at US$44.00 per share. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. For example, we noticed that Steven Madden's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 44% growth to the end of 2021 on an annualised basis. That is well above its historical decline of 0.5% a year over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 9.3% annually. So it looks like Steven Madden is expected to grow faster than its competitors, at least for a while.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Steven Madden's earnings potential next year. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider 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.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Steven Madden analysts - going out to 2023, and you can see them free on our platform here.
Before you take the next step you should know about the 3 warning signs for Steven Madden 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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