It's been a pretty great week for MMA Offshore Limited (ASX:MRM) shareholders, with its shares surging 14% to AU$0.33 in the week since its latest half-year results. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Taking into account the latest results, the current consensus, from the dual analysts covering MMA Offshore, is for revenues of AU$240.9m in 2021, which would reflect a not inconsiderable 8.0% reduction in MMA Offshore's sales over the past 12 months. Losses are expected to hold steady at around AU$0.52. Before this latest report, the consensus had been expecting revenues of AU$280.4m and AU$0.01 per share in losses. There's been a definite change in sentiment in this update, with the analysts administering a notable cut to next year's revenue estimates, while at the same time increasing their loss per share forecasts.
The average price target was broadly unchanged at AU$0.86, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the MMA Offshore's past performance and to peers in the same industry. One thing that stands out from these estimates is that shrinking revenues are expected to moderate from the historical decline of 14% per annum over the past five years.
The Bottom Line
The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at MMA Offshore. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
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 analyst estimates for MMA Offshore going out as far as 2023, and you can see them free on our platform here.
It is also worth noting that we have found 3 warning signs for MMA Offshore (1 makes us a bit uncomfortable!) that you need to take into consideration.
If you decide to trade MMA Offshore, use the lowest-cost* platform that is rated #1 Overall by Barron’s, Interactive Brokers. Trade stocks, options, futures, forex, bonds and funds on 135 markets, all from a single integrated account. Promoted
Valuation is complex, but we're helping make it simple.
Find out whether MMA Offshore is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.View the Free Analysis
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.
*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.