Herman Miller, Inc. (NASDAQ:MLHR) shareholders will have a reason to smile today, with the analysts making substantial upgrades to next year's statutory forecasts. The revenue forecast for next year has experienced a facelift, with the analysts now much more optimistic on its sales pipeline.
After this upgrade, Herman Miller's three analysts are now forecasting revenues of US$2.9b in 2022. This would be a huge 25% improvement in sales compared to the last 12 months. The losses are expected to disappear over the next year or so, with forecasts for a profit of US$3.09 per share next year. Prior to this update, the analysts had been forecasting revenues of US$2.6b and earnings per share (EPS) of US$3.11 in 2022. It seems analyst sentiment has certainly become more bullish on revenues, even though they haven't changed their view on earnings per share.
It may not be a surprise to see that the analysts have reconfirmed their price target of US$55.00, implying that the uplift in sales is not expected to greatly contribute to Herman Miller's valuation in the near term. 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 Herman Miller at US$60.00 per share, while the most bearish prices it at US$50.00. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Herman Miller is an easy business to forecast or the underlying assumptions are obvious.
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 Herman Miller's growth to accelerate, with the forecast 20% annualised growth to the end of 2022 ranking favourably alongside historical growth of 2.5% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 7.3% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Herman Miller 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 analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at Herman Miller.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Herman Miller analysts - going out to 2023, and you can see them free on our platform here.
Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.
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