As you might know, Altra Industrial Motion Corp. (NASDAQ:AIMC) just kicked off its latest quarterly results with some very strong numbers. Altra Industrial Motion delivered a significant beat to revenue and earnings per share (EPS) expectations, with sales hitting US$438m, some 11% above indicated. Statutory EPS were US$0.59, an impressive 171% ahead of forecasts. 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 thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
After the latest results, the six analysts covering Altra Industrial Motion are now predicting revenues of US$1.82b in 2021. If met, this would reflect a credible 6.2% improvement in sales compared to the last 12 months. Altra Industrial Motion is also expected to turn profitable, with statutory earnings of US$2.23 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$1.76b and earnings per share (EPS) of US$1.86 in 2021. So it seems there's been a definite increase in optimism about Altra Industrial Motion's future following the latest results, with a decent improvement in the earnings per share forecasts in particular.
It will come as no surprise to learn that the analysts have increased their price target for Altra Industrial Motion 16% to US$54.67on the back of these upgrades. 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. The most optimistic Altra Industrial Motion analyst has a price target of US$66.00 per share, while the most pessimistic values it at US$50.00. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.
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 Altra Industrial Motion's revenue growth is expected to slow, with forecast 6.2% increase next year well below the historical 23%p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 7.4% next year. So it's pretty clear that, while Altra Industrial Motion's revenue growth is expected to slow, it's expected to grow roughly in line with the industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Altra Industrial Motion's earnings potential next year. There was also an upgrade to revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as 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.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Altra Industrial Motion analysts - going out to 2022, and you can see them free on our platform here.
And what about risks? Every company has them, and we've spotted 3 warning signs for Altra Industrial Motion (of which 1 shouldn't be ignored!) you should know about.
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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