Investors in Man Group plc (LON:EMG) had a good week, as its shares rose 7.6% to close at UK£1.60 following the release of its annual results. It was a workmanlike result, with revenues of US$939m coming in 6.4% ahead of expectations, and statutory earnings per share of US$0.093, in line with analyst appraisals. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Check out our latest analysis for Man Group
After the latest results, the eleven analysts covering Man Group are now predicting revenues of US$1.08b in 2021. If met, this would reflect a decent 15% improvement in sales compared to the last 12 months. Per-share earnings are expected to jump 57% to US$0.15. Before this earnings report, the analysts had been forecasting revenues of US$1.02b and earnings per share (EPS) of US$0.14 in 2021. So there seems to have been a moderate uplift in sentiment following the latest results, given the upgrades to both revenue and earnings per share forecasts for next year.
It will come as no surprise to learn that the analysts have increased their price target for Man Group 7.8% to US$2.37on the back of these upgrades. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Man Group analyst has a price target of US$2.26 per share, while the most pessimistic values it at US$1.25. 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.
Of course, another way to look at these forecasts is to place them into context against the industry itself. The analysts are definitely expecting Man Group's growth to accelerate, with the forecast 15% annualised growth to the end of 2021 ranking favourably alongside historical growth of 1.1% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 9.4% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Man Group to grow faster than 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 Man Group following these results. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider 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 Man Group. Long-term earnings power is much more important than next year's profits. We have forecasts for Man Group going out to 2023, and you can see them free on our platform here.
It is also worth noting that we have found 3 warning signs for Man Group that you need to take into consideration.
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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.
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About LSE:EMG
Very undervalued established dividend payer.
