Metall Zug AG (VTX:METN) investors will be delighted, with the company turning in some strong numbers with its latest results. The company beat both earnings and revenue forecasts, with revenue of CHF826m, some 2.8% above estimates, and statutory earnings per share (EPS) coming in at CHF31.93, 779% ahead of expectations. 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 twin analysts covering Metall Zug provided consensus estimates of CHF592.0m revenue in 2021, which would reflect a painful 28% decline on its sales over the past 12 months. Statutory earnings per share are predicted to surge 71% to CHF54.75. Before this earnings report, the analysts had been forecasting revenues of CHF599.0m and earnings per share (EPS) of CHF52.65 in 2021. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.
The consensus price target rose 40% to CHF2,100, suggesting that higher earnings estimates flow through to the stock's valuation as well.
Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that sales are expected to reverse, with a forecast 28% annualised revenue decline to the end of 2021. That is a notable change from historical growth of 4.1% 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 8.9% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Metall Zug is expected to lag 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 Metall Zug 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. 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 analyst estimates for Metall Zug going out as far as 2025, and you can see them free on our platform here.
You should always think about risks though. Case in point, we've spotted 2 warning signs for Metall Zug you should be aware of.
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