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Revenue Beat: Macmahon Holdings Limited Beat Analyst Estimates By 12%

Macmahon Holdings Limited (ASX:MAH) just released its latest half-yearly results and things are looking bullish. It was a positive result, with revenues and statutory earnings per share (EPS) both performing well. Revenues were 12% higher than analysts had forecast, at AU$687m, while EPS of AU$0.014 beat analyst models by 5.4%. 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. With this in mind, we've gathered the latest statutory forecasts to see what analysts are expecting for next year.

View our latest analysis for Macmahon Holdings

ASX:MAH Past and Future Earnings, February 26th 2020
ASX:MAH Past and Future Earnings, February 26th 2020

Taking into account the latest results, the current consensus from Macmahon Holdings's dual analysts is for revenues of AU$1.37b in 2020, which would reflect a decent 9.6% increase on its sales over the past 12 months. Statutory earnings per share are expected to swell 17% to AU$0.029. Yet prior to the latest earnings, analysts had been forecasting revenues of AU$1.28b and earnings per share (EPS) of AU$0.027 in 2020. So there seems to have been a moderate uplift in analyst sentiment following the latest results, given the upgrades to both revenue and earnings per share forecasts for next year.

With these upgrades, we're not surprised to see that analysts have lifted their price target 18% to AU$0.36 per share.

It can also be useful to step back and take a broader view of how analyst forecasts compare to Macmahon Holdings's performance in recent years. We would highlight that Macmahon Holdings's revenue growth is expected to slow, with forecast 9.6% increase next year well below the historical 21%p.a. growth over the last five years. By way of comparison, other companies in this market with analyst coverage, are forecast to grow their revenue at 0.4% next year. So it's pretty clear that, while Macmahon Holdings's revenue growth is expected to slow, it's still expected to grow faster than the market itself.

The Bottom Line

The most important thing to take away from this is that analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Macmahon Holdings following these results. Fortunately, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider market. There was also a nice increase in the price target, with analysts feeling that the intrinsic value of the business is improving.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have analyst estimates for Macmahon Holdings going out as far as 2022, and you can see them free on our platform here.

We also provide an overview of the Macmahon Holdings Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.