As you might know, Wright Medical Group N.V. (NASDAQ:WMGI) just kicked off its latest third-quarter results with some very strong numbers. Results overall were solid, with revenues arriving 9.7% better than analyst forecasts at US$223m. Higher revenues also resulted in substantially lower statutory losses which, at US$0.13 per share, were 9.7% smaller than the analysts expected. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
See our latest analysis for Wright Medical Group
Taking into account the latest results, the most recent consensus for Wright Medical Group from six analysts is for revenues of US$1.06b in 2021 which, if met, would be a huge 29% increase on its sales over the past 12 months. Earnings are expected to improve, with Wright Medical Group forecast to report a statutory profit of US$0.20 per share. Before this earnings report, the analysts had been forecasting revenues of US$1.05b and earnings per share (EPS) of US$0.20 in 2021. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
There were no changes to revenue or earnings estimates or the price target of US$30.67, suggesting that the company has met expectations in its recent result. 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. The most optimistic Wright Medical Group analyst has a price target of US$31.00 per share, while the most pessimistic values it at US$30.00. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company 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. The analysts are definitely expecting Wright Medical Group's growth to accelerate, with the forecast 29% growth ranking favourably alongside historical growth of 13% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 10.0% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Wright Medical Group is expected to grow much faster than its industry.
The Bottom Line
The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. The consensus price target held steady at US$30.67, with the latest estimates not enough to have an impact on their price targets.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Wright Medical Group going out to 2023, 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 1 warning sign with Wright Medical Group , and understanding it 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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