Mistras Group, Inc. (NYSE:MG) shares fell 8.1% to US$14.03 in the week since its latest quarterly results. It looks like a pretty bad result, all things considered. Although revenues of US$192m were in line with analyst predictions, earnings fell badly short, missing estimates by 40% to hit US$0.11 per share. This is an important time for investors, as they can track a company’s performance in its report, look at what top analysts are forecasting for next year, and see whether the latest forecasts would suggest a change of heart on the company. We thought readers would find it interesting to see analysts’ latest post-earnings forecasts for next year.
Taking into account the latest results, the most recent consensus for Mistras Group from five analysts is for revenues of US$790m in 2020, which is an okay 5.3% increase on its sales over the past 12 months. Earnings per share are expected to bounce 481% to US$0.85. Before this earnings report, analysts had been forecasting revenues of US$803m and earnings per share (EPS) of US$0.83 in 2020. 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.
The consensus price target rose 5.1% to US$18.75 despite there being no meaningful change to earnings estimates. It could be that analysts are reflecting the predictability of Mistras Group’s earnings by assigning a price premium. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Mistras Group analyst has a price target of US$21.00 per share, while the most pessimistic values it at US$16.00. Still, with such a tight range of estimates, it suggests analysts have a pretty good idea of what they think the company is worth.
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 analysts are more or less bullish relative to other companies in the market. Analysts are definitely expecting Mistras Group’s growth to accelerate, with the forecast 5.3% growth ranking favourably alongside historical growth of 1.3% 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 6.5% per year. So it’s clear that despite the acceleration in growth, Mistras Group is expected to grow meaningfully slower than the market average.
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 reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations – although our data does suggest that Mistras Group’s revenues are expected to perform worse than the wider market. Analysts also upgraded their price target, suggesting that analysts believe the intrinsic value of the business is likely to improve over time.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates – from multiple Mistras Group analysts – going out to 2021, and you can see them free on our platform here.
You can also view our analysis of Mistras Group’s balance sheet, and whether we think Mistras Group is carrying too much debt, for free on our platform here.
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