Last week, you might have seen that MLG Oz Limited (ASX:MLG) released its half-yearly result to the market. The early response was not positive, with shares down 7.5% to AU$0.73 in the past week. It was a mildly positive result, with revenues exceeding expectations at AU$142m, while statutory earnings per share (EPS) of AU$0.12 were in line with analyst forecasts. The 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Following the latest results, MLG Oz's dual analysts are now forecasting revenues of AU$290.9m in 2022. This would be an okay 4.3% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to ascend 13% to AU$0.056. Yet prior to the latest earnings, the analysts had been anticipated revenues of AU$270.4m and earnings per share (EPS) of AU$0.091 in 2022. While next year's revenue estimates increased, there was also a pretty serious reduction to EPS expectations, suggesting the consensus has a bit of a mixed view of these results.
The consensus price target fell 8.2% to AU$0.95, suggesting that the analysts are primarily focused on earnings as the driver of value for this business.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that MLG Oz's revenue growth is expected to slow, with the forecast 8.7% annualised growth rate until the end of 2022 being well below the historical 23% growth over the last year. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue shrink 1.2% per year. Factoring in the forecast slowdown in growth, it's pretty clear that MLG Oz is still expected to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, they also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of MLG Oz's future valuation.
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 analyst estimates for MLG Oz going out as far as 2024, and you can see them free on our platform here.
Plus, you should also learn about the 2 warning signs we've spotted with MLG Oz .
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.