Investors in Matrix Service Company (NASDAQ:MTRX) had a good week, as its shares rose 9.9% to close at US$8.35 following the release of its first-quarter results. It looks like a pretty bad result, given that revenues fell 20% short of analyst estimates at US$183m, and the company reported a statutory loss of US$0.12 per share instead of the profit that the analysts had been forecasting. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Taking into account the latest results, Matrix Service's twin analysts currently expect revenues in 2021 to be US$927.3m, approximately in line with the last 12 months. Earnings are expected to improve, with Matrix Service forecast to report a statutory profit of US$0.35 per share. In the lead-up to this report, the analysts had been modelling revenues of US$953.5m and earnings per share (EPS) of US$0.41 in 2021. The analysts seem less optimistic after the recent results, reducing their sales forecasts and making a real cut to earnings per share numbers.
It'll come as no surprise then, to learn that the analysts have cut their price target 16% to US$13.50.
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 forecasts are more or less bullish relative to other companies in the industry. We would also point out that the forecast 1.9% revenue decline is roughly in line with the historical trend, which saw revenues shrink 1.7% annually over the past five years Compare this with our data on other companies (with analyst coverage) in the industry, which in aggregate are forecast to see their revenue grow 5.3% next year. It seems clear that while the revenue forecasts are all negative, Matrix Service's revenue decline is expected to be less severe than that of the industry itself.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At least one analyst has provided forecasts out to 2022, which can be seen for free on our platform here.
And what about risks? Every company has them, and we've spotted 1 warning sign for Matrix Service you should know about.
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