Shareholders of DMC Global Inc. (NASDAQ:BOOM) will be pleased this week, given that the stock price is up 13% to US$37.41 following its latest quarterly results. In addition to beating expectations by 19% with revenues of US$55m, DMC Global delivered a surprise (statutory) profit of US$0.07 per share, a sweet improvement compared to the losses that the analysts forecast. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Following the recent earnings report, the consensus from four analysts covering DMC Global is for revenues of US$237.4m in 2021, implying a considerable 8.1% decline in sales compared to the last 12 months. Per-share statutory losses are expected to explode, reaching US$0.24 per share. Before this earnings report, the analysts had been forecasting revenues of US$227.8m and earnings per share (EPS) of US$0.22 in 2021. Yet despite a slight bump in revenues, the analysts are now forecasting a loss instead of a profit, which looks like a reduction in sentiment after the latest results.
The average price target rose 12% to US$40.25, even thoughthe analysts have been updating their forecasts to show higher revenues and higher forecast losses. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values DMC Global at US$45.00 per share, while the most bearish prices it at US$34.00. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.
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 8.1%, a significant reduction from annual growth of 20% 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 5.2% annually for the foreseeable future. It's pretty clear that DMC Global's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The biggest low-light for us was that the forecasts for DMC Global dropped from profits to a loss next year. Fortunately, they also upgraded their revenue estimates, although our data indicates sales are expected to perform worse than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
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 forecasts for DMC Global going out to 2022, and you can see them free on our platform here.
However, before you get too enthused, we've discovered 2 warning signs for DMC Global that you should be aware of.
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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