Yahoo Finance Magellan Aerospace Corporation Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Predictions
Shareholders might have noticed that Magellan Aerospace Corporation (TSE:MAL) filed its quarterly result this time last week. The early response was not positive, with shares down 2.7% to CA$6.24 in the past week. Revenues were CA$239m, approximately in line with whatthe analysts expected, although statutory earnings per share (EPS) crushed expectations, coming in at CA$0.34, an impressive 42% ahead of estimates. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
View our latest analysis for Magellan Aerospace
Following the recent earnings report, the consensus from three analysts covering Magellan Aerospace is for revenues of CA$788.3m in 2020, implying an uneasy 20% decline in sales compared to the last 12 months. Statutory earnings per share are expected to plummet 42% to CA$0.67 in the same period. Before this earnings report, the analysts had been forecasting revenues of CA$832.7m and earnings per share (EPS) of CA$0.43 in 2020. While revenue forecasts have been revised downwards, the analysts look to have become more optimistic on the company's cost base, given the considerable lift to to the earnings per share numbers.
The analysts have cut their price target 18% to CA$9.75 per share, suggesting that the declining revenue was a more crucial indicator than the expected improvement in earnings. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Magellan Aerospace at CA$12.00 per share, while the most bearish prices it at CA$6.25. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that sales are expected to slow, with a forecast revenue decline of 20%, a significant reduction from annual growth of 1.7% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 3.1% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Magellan Aerospace is expected to lag the wider industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Magellan Aerospace's earnings potential next year. Unfortunately, they also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. Even so, earnings are more important to the intrinsic value of the business. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Magellan Aerospace's future valuation.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Magellan Aerospace analysts - going out to 2022, and you can see them free on our platform here.
Before you take the next step you should know about the 3 warning signs for Magellan Aerospace (1 is significant!) that we have uncovered.
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