MRC Global Inc. (NYSE:MRC) defied analyst predictions to release its quarterly results, which were ahead of market expectations. MRC Global beat earnings, with revenues hitting US$806m, ahead of expectations, and statutory earnings per share outperforming analyst reckonings by a solid 15%. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Following last week's earnings report, MRC Global's six analysts are forecasting 2024 revenues to be US$3.35b, approximately in line with the last 12 months. Per-share earnings are expected to expand 11% to US$0.98. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$3.31b and earnings per share (EPS) of US$1.03 in 2024. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a small dip in their earnings per share forecasts.
The consensus price target held steady at US$15.70, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic MRC Global analyst has a price target of US$17.00 per share, while the most pessimistic values it at US$13.50. 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.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the MRC Global's past performance and to peers in the same industry. From these estimates it looks as though the analysts expect the years of declining revenue to come to an end, given the flat forecast out to 2024. That would be a definite improvement, given that the past five years have seen revenue shrink 2.0% annually. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 5.7% annually. Although MRC Global's revenues are expected to improve, it seems that it is still expected to grow slower than the wider industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for MRC Global. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that MRC Global's revenue is expected to perform worse than the wider industry. The consensus price target held steady at US$15.70, with the latest estimates not enough to have an impact on their price targets.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for MRC Global going out to 2026, and you can see them free on our platform here.
You can also view our analysis of MRC Global's balance sheet, and whether we think MRC Global is carrying too much debt, for free on our platform here.
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