Malibu Boats, Inc. (NASDAQ:MBUU) defied analyst predictions to release its second-quarter results, which were ahead of market expectations. It was overall a positive result, with revenues beating expectations by 9.7% to hit US$180m. Malibu Boats also reported a statutory profit of US$0.81, which was an impressive 30% above what analysts had forecast. 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. Readers will be glad to know we’ve aggregated the latest statutory forecasts to see whether analysts have changed their mind on Malibu Boats after the latest results.
Taking into account the latest results, Malibu Boats’s seven analysts currently expect revenues in 2020 to be US$748.4m, approximately in line with the last 12 months. Statutory earnings per share are expected to increase 6.5% to US$3.74. Yet prior to the latest earnings, analysts had been forecasting 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.
Analysts have been lifting their price targets on the back of the earnings upgrade, with the consensus price target rising 14% to US$55.67. The consensus price target just an average of individual analyst targets, so – considering that the price target changed, it would be handy to see how wide the range of underlying estimates is. The most optimistic Malibu Boats analyst has a price target of US$60.00 per share, while the most pessimistic values it at US$50.00. Still, with such a tight range of estimates, it suggests analysts have a pretty good idea of what they think the company is worth.
Further, we can compare these estimates to past performance, and see how Malibu Boats forecasts compare to the wider market’s forecast performance. 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. Compare this against other companies (with analyst forecasts) in the market, which are in aggregate expected to see revenue growth of 13% next year. So it’s pretty clear that, while revenue growth is expected to slow down, analysts still expect the wider market to grow faster than Malibu Boats.
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. On the plus side, there were no major changes to revenue estimates; although analyst forecasts imply revenues will perform worse than the wider market. Analysts also upgraded their price target, suggesting that analysts believe the intrinsic value of the business is likely to improve over time.
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. At Simply Wall St, we have a full range of analyst estimates for Malibu Boats going out to 2022, and you can see them free on our platform here..
You can also view our analysis of Malibu Boats’s balance sheet, and whether we think Malibu Boats is carrying too much debt, for free on our platform here.
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