As you might know, Malibu Boats, Inc. (NASDAQ:MBUU) just kicked off its latest quarterly results with some very strong numbers. Malibu Boats delivered a significant beat to revenue and earnings per share (EPS) expectations, with sales hitting US$172m and EPS reaching US$0.76, both beating estimates by more than 10%. 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. With this in mind, we’ve gathered the latest forecasts to see what analysts are expecting for next year.
Taking into account the latest results, Malibu Boats’s six analysts currently expect revenues in 2020 to be US$739m, approximately in line with the last 12 months. Earnings per share are expected to accumulate 8.9% to US$3.68. In the lead-up to this report, analysts had been modelling revenues of US$729m and earnings per share (EPS) of US$3.64 in 2020. So it’s pretty clear that, although analysts have updated their estimates, there’s been no major change in expectations for the business following the latest results.
With no major changes to earnings forecasts, the consensus price target fell 12% to US$47.40, suggesting that analysts might have previously been hoping for an earnings upgrade. 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 Malibu Boats analyst has a price target of US$52.00 per share, while the most pessimistic values it at US$40.00. The narrow spread of estimates could suggest that the business’ future is relatively easy to value, or that analysts have a clear view on its prospects.
Zooming out to look at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up both against past performance, and against industry growth estimates. We would highlight that Malibu Boats’s revenue growth is expected to slow, with forecast 0.8% increase next year well below the historical 28%p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the market, which are in aggregate expected to see revenue growth of 9.0% next year. Factoring in the forecast slowdown in growth, it seems obvious that analysts are also expecting Malibu Boats to grow slower than the wider market.
The Bottom Line
The most obvious conclusion from these results is that there’s been no major change in the business’ prospects in recent times, with analysts holding earnings per share steady, in line with previous estimates. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations – although our data does suggest that Malibu Boats’s revenues are expected to perform worse than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by the latest results, leading to a lower estimate of Malibu Boats’s future valuation.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates – from multiple Malibu Boats analysts – going out to 2021, and you can see them free on our platform here.
It might also be worth considering whether Malibu Boats’s debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
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