Yahoo Finance The Magellan Financial Group Limited (ASX:MFG) Half-Year Results Are Out And Analysts Have Published New Forecasts
Last week, you might have seen that Magellan Financial Group Limited (ASX:MFG) released its half-year result to the market. The early response was not positive, with shares down 3.7% to AU$48.45 in the past week. Results were roughly in line with estimates, with revenues of AU$327m and statutory earnings per share of AU$1.11. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
See our latest analysis for Magellan Financial Group
Taking into account the latest results, Magellan Financial Group's 13 analysts currently expect revenues in 2021 to be AU$669.3m, approximately in line with the last 12 months. Statutory per-share earnings are expected to be AU$2.23, roughly flat on the last 12 months. In the lead-up to this report, the analysts had been modelling revenues of AU$690.7m and earnings per share (EPS) of AU$2.17 in 2021. So it's pretty clear that while sentiment around revenues has declined following the latest results, the analysts are now more bullish on the company's earnings power.
There's been no real change to the average price target of AU$54.73, with the lower revenue and higher earnings forecasts not expected to meaningfully impact the company's valuation over a longer timeframe. 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 Financial Group at AU$70.48 per share, while the most bearish prices it at AU$39.60. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Magellan Financial Group shareholders.
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 highlight that Magellan Financial Group's revenue growth is expected to slow, with forecast 1.0% increase next year well below the historical 19%p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 5.9% next year. Factoring in the forecast slowdown in growth, it seems obvious that Magellan Financial Group is also expected to grow slower than other industry participants.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Magellan Financial Group'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. Still, earnings per share are more important to value creation for shareholders. The consensus price target held steady at AU$54.73, with the latest estimates not enough to have an impact on their price targets.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Magellan Financial Group analysts - going out to 2025, and you can see them free on our platform here.
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 2 warning signs with Magellan Financial Group , and understanding these should be part of your investment process.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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