Mersen SA (EPA:MRN) Released Earnings Last Week And Analysts Lifted Their Price Target To €31.38

It's been a good week for Mersen SA (EPA:MRN) shareholders, because the company has just released its latest annual results, and the shares gained 7.6% to €29.70. It was an okay report, and revenues came in at €847m, approximately in line with analyst estimates leading up to the results announcement. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Mersen after the latest results.

View our latest analysis for Mersen

Taking into account the latest results, the current consensus from Mersen's four analysts is for revenues of €886.2m in 2021, which would reflect a satisfactory 4.6% increase on its sales over the past 12 months. Statutory earnings per share are predicted to step up 17% to €2.30. In the lead-up to this report, the analysts had been modelling revenues of €885.8m and earnings per share (EPS) of €2.05 in 2021. There was no real change to the revenue estimates, but the analysts do seem more bullish on earnings, given the nice increase in earnings per share expectations following these results.

The consensus price target rose 5.0% to €31.38, suggesting that higher earnings estimates flow through to the stock's valuation as well. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Mersen, with the most bullish analyst valuing it at €34.00 and the most bearish at €28.00 per share. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company 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. We can infer from the latest estimates that forecasts expect a continuation of Mersen'shistorical trends, as the 4.6% annualised revenue growth to the end of 2021 is roughly in line with the 4.6% annual revenue growth over the past five years. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 5.0% annually. It's clear that while Mersen's revenue growth is expected to continue on its current trajectory, it's only expected to grow in line with the industry itself.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Mersen's earnings potential next year. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall industry. We note an upgrade to the price target, suggesting that the analysts believes 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 Mersen. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Mersen analysts - going out to 2022, and you can see them free on our platform here.

It might also be worth considering whether Mersen's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.

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