Bearish: Analysts just cut their Mayville Engineering Company, Inc. revenue and EPS estimates (NYSE:MEC)
One thing we could say about the analysts on Mayville Engineering Company, Inc. (NYSE:MEC) – they are not optimistic, as they have just made a major negative revision to their short-term (statutory) forecast for the organization. Both revenue and earnings per share (EPS) forecasts have been lowered as analysts see gray clouds on the horizon.
Following the downgrade, the latest consensus from Mayville Engineering Company’s four analysts is for revenue of US$510 million in 2022, which would reflect a decent 17% improvement in sales over the past 12 months. Earnings per share are expected to climb 206% to US$1.06. Prior to this update, analysts were forecasting revenue of US$569 million and earnings per share (EPS) of US$1.41 in 2022. It appears analyst sentiment has declined significantly, with a measurable reduction in revenue estimates and a pretty serious drop in earnings per share as well.
Check out our latest analysis for Mayville Engineering Company
It will therefore come as no surprise to learn that analysts lowered their price target by 24% to US$15.67. It might also be instructive to look at the range of analysts’ estimates, to gauge how different the outlier opinions are from the mean. Mayville Engineering Company’s most optimistic analyst has a price target of US$19.00 per share, while the most pessimistic puts it at US$13.00. These price targets show that analysts have differing opinions on the company, but the estimates don’t vary enough to suggest to us that some are betting on wild success or total failure.
Another way to view these estimates is in the context of the big picture, such as how the forecast compares to past performance, and whether the forecast is more or less optimistic compared to other companies in the industry. For example, we noticed that Mayville Engineering Company’s growth rate is expected to accelerate significantly, with revenue expected to show 13% growth by the end of 2022 on an annualized basis. That’s well above its historic decline of 3.4% per year over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are expected to see revenue growth of 7.5% annually. So it looks like Mayville Engineering Company is set to grow faster than its competitors, at least for a while.
The most important thing to remember is that analysts have cut their earnings per share estimates, expecting a sharp drop in trading conditions. Although analysts have lowered their earnings estimates, these forecasts still imply that earnings will outperform the broader market. Given the scale of the downgrades, it wouldn’t be surprising to see the market become more wary of activity.
Yet the company’s long-term outlook is far more relevant than next year’s earnings. We have estimates – from several Mayville Engineering Company analysts – going out to 2024, and you can view them for free on our platform here.
Of course, see the management of the company invest large sums of money in a stock can be just as useful as knowing if analysts are lowering their estimates. So you can also search this free list of stocks that insiders buy.
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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.