Shareholders might have noticed that MasTec, Inc. (NYSE:MTZ) filed its third-quarter result this time last week. The early response was not positive, with shares down 2.8% to US$49.64 in the past week. Revenues missed the mark, coming in 12% below forecasts, at US$1.7b. Statutory profits were better overall though, with per-share profits of US$1.59 being a notable 11% above what the analysts were modelling. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
After the latest results, the eight analysts covering MasTec are now predicting revenues of US$7.44b in 2021. If met, this would reflect a meaningful 16% improvement in sales compared to the last 12 months. Statutory per share are forecast to be US$4.19, approximately in line with the last 12 months. Before this earnings report, the analysts had been forecasting revenues of US$7.49b and earnings per share (EPS) of US$4.13 in 2021. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
With the analysts reconfirming their revenue and earnings forecasts, it's surprising to see that the price target rose 8.8% to US$60.70. It looks as though they previously had some doubts over whether the business would live up to their expectations. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic MasTec analyst has a price target of US$78.00 per share, while the most pessimistic values it at US$54.00. 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.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's clear from the latest estimates that MasTec's rate of growth is expected to accelerate meaningfully, with the forecast 16% revenue growth noticeably faster than its historical growth of 10%p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 5.2% next year. Factoring in the forecast acceleration in revenue, it's pretty clear that MasTec is expected to grow much faster than its industry.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster 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.
With that in mind, we wouldn't be too quick to come to a conclusion on MasTec. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for MasTec going out to 2022, and you can see them free on our platform here..
We don't want to rain on the parade too much, but we did also find 1 warning sign for MasTec that you need to be mindful of.
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