Analysts Are Updating Their Mitchells & Butlers plc (LON:MAB) Estimates After Its Yearly Results

The annual results for Mitchells & Butlers plc (LON:MAB) were released last week, making it a good time to revisit its performance. It looks like the results were pretty good overall. While revenues of UK£1.1b were in line with analyst predictions, statutory losses were much smaller than expected, with Mitchells & Butlers losing UK£0.12 per share. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

Check out our latest analysis for Mitchells & Butlers

Taking into account the latest results, the consensus forecast from Mitchells & Butlers' nine analysts is for revenues of UK£2.15b in 2022, which would reflect a substantial 102% improvement in sales compared to the last 12 months. Earnings are expected to improve, with Mitchells & Butlers forecast to report a statutory profit of UK£0.21 per share. In the lead-up to this report, the analysts had been modelling revenues of UK£2.14b and earnings per share (EPS) of UK£0.24 in 2022. So there's definitely been a decline in sentiment after the latest results, noting the substantial drop in new EPS forecasts.

It might be a surprise to learn that the consensus price target was broadly unchanged at UK£3.66, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Mitchells & Butlers at UK£4.30 per share, while the most bearish prices it at UK£2.90. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

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. For example, we noticed that Mitchells & Butlers' rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 102% growth to the end of 2022 on an annualised basis. That is well above its historical decline of 13% a year over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 13% annually. Not only are Mitchells & Butlers' revenues expected to improve, it seems that the analysts are also expecting it 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. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster 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. At Simply Wall St, we have a full range of analyst estimates for Mitchells & Butlers going out to 2024, and you can see them free on our platform here..

You still need to take note of risks, for example - Mitchells & Butlers has 3 warning signs (and 1 which is a bit concerning) we think you should know about.

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.

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