MBIA Inc. (NYSE:MBI) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. The consensus estimated revenue numbers rose, with their view now clearly much more bullish on the company's business prospects.
Following the latest upgrade, the two analysts covering MBIA provided consensus estimates of US$132m revenue in 2021, which would reflect a sizeable 61% decline on its sales over the past 12 months. Losses are presumed to reduce, shrinking 17% from last year to US$5.46. Yet before this consensus update, the analysts had been forecasting revenues of US$106m and losses of US$3.62 per share in 2021. Ergo, there's been a clear change in sentiment, with the analysts lifting this year's revenue estimates, while at the same time increasing their loss per share forecasts to reflect the cost of achieving this growth.
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. One more thing stood out to us about these estimates, and it's the idea that MBIA's decline is expected to accelerate, with revenues forecast to fall at an annualised rate of 72% to the end of 2021. This tops off a historical decline of 10% a year over the past five years. Compare this against analyst estimates for companies in the broader industry, which suggest that revenues (in aggregate) are expected to grow 2.8% annually. So while a broad number of companies are forecast to grow, unfortunately MBIA is expected to see its sales affected worse than other companies in the industry.
The Bottom Line
The most important thing to note from this downgrade is that the consensus increased its forecast losses this year, suggesting all may not be well at MBIA. Pleasantly, analysts also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow slower 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 MBIA.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have analyst estimates for MBIA going out as far as 2022, 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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