Mainfreight Limited Beat Revenue Forecasts By 6.6%: Here's What Analysts Are Forecasting Next

By
Simply Wall St
Published
May 28, 2021
NZSE:MFT
Source: Shutterstock

A week ago, Mainfreight Limited (NZSE:MFT) came out with a strong set of yearly numbers that could potentially lead to a re-rate of the stock. Results were good overall, with revenues beating analyst predictions by 6.6% to hit NZ$3.5b. Statutory earnings per share (EPS) came in at NZ$1.87, some 3.9% above whatthe analysts had expected. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

Check out our latest analysis for Mainfreight

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NZSE:MFT Earnings and Revenue Growth May 28th 2021

Taking into account the latest results, the consensus forecast from Mainfreight's four analysts is for revenues of NZ$3.98b in 2022, which would reflect a solid 12% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to climb 19% to NZ$2.23. Yet prior to the latest earnings, the analysts had been anticipated revenues of NZ$3.65b and earnings per share (EPS) of NZ$2.10 in 2022. It looks like there's been a modest increase in sentiment following the latest results, withthe analysts becoming a bit more optimistic in their predictions for both revenues and earnings.

It will come as no surprise to learn that the analysts have increased their price target for Mainfreight 6.9% to NZ$76.20on the back of these upgrades. 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 Mainfreight at NZ$80.15 per share, while the most bearish prices it at NZ$70.66. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Mainfreight is an easy business to forecast or the the analysts are all using similar assumptions.

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. The analysts are definitely expecting Mainfreight's growth to accelerate, with the forecast 12% annualised growth to the end of 2022 ranking favourably alongside historical growth of 9.0% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 6.4% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Mainfreight is expected to grow much faster than its industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Mainfreight's earnings potential next year. Happily, they also upgraded their revenue estimates, and are forecasting revenues 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 said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Mainfreight going out to 2024, and you can see them free on our platform here.

You can also view our analysis of Mainfreight's balance sheet, and whether we think Mainfreight is carrying too much debt, for free on our platform here.

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