It's been a mediocre week for MotorCycle Holdings Limited (ASX:MTO) shareholders, with the stock dropping 15% to AU$1.50 in the week since its latest half-year results. MotorCycle Holdings reported AU$178m in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of AU$0.14 beat expectations, being 9.1% higher than what analysts expected. Following the result, 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. We've gathered the most recent statutory forecasts to see whether analysts have changed their earnings models, following these results.

View our latest analysis for MotorCycle Holdings

Following the latest results, MotorCycle Holdings's twin analysts are now forecasting revenues of AU$353.8m in 2020. This would be a reasonable 5.5% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to climb 19% to AU$0.15. Before this earnings report, analysts had been forecasting revenues of AU$345.8m and earnings per share (EPS) of AU$0.14 in 2020. There's been a pretty noticeable increase in sentiment, with analysts upgrading revenues and making a decent improvement in earnings per share in particular

Despite these upgrades, analysts have not made any major changes to their price target of AU$2.38, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth.

Zooming out to look at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up both against past performance, and against industry growth estimates. We would highlight that MotorCycle Holdings's revenue growth is expected to slow, with forecast 5.5% increase next year well below the historical 15%p.a. growth over the last three years. Compare this against other companies (with analyst forecasts) in the market, which are in aggregate expected to see revenue growth of 7.6% next year. So it's pretty clear that, while revenue growth is expected to slow down, analysts still expect the wider market to grow faster than MotorCycle Holdings.

The Bottom Line

The biggest takeaway for us from these new estimates is that the consensus upgraded its earnings per share estimates, showing a clear improvement in sentiment around MotorCycle Holdings's earnings potential next year. They also upgraded their revenue estimates for next year, even though sales are expected to grow slower than the wider market. The consensus price target held steady at AU$2.38, with the latest estimates not enough to have an impact on analysts' estimated valuations.