Yahoo Finance Forecast: Analysts Think Russel Metals Inc.'s (TSE:RUS) Business Prospects Have Improved Drastically
Shareholders in Russel Metals Inc. (TSE:RUS) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. The analysts greatly increased their revenue estimates, suggesting a stark improvement in business fundamentals.
Following the latest upgrade, Russel Metals' seven analysts currently expect revenues in 2022 to be CA$4.7b, approximately in line with the last 12 months. Statutory earnings per share are anticipated to nosedive 37% to CA$4.49 in the same period. Before this latest update, the analysts had been forecasting revenues of CA$4.2b and earnings per share (EPS) of CA$3.97 in 2022. So we can see there's been a pretty clear increase in analyst sentiment in recent times, with both revenues and earnings per share receiving a decent lift in the latest estimates.
Check out our latest analysis for Russel Metals
Despite these upgrades, the analysts have not made any major changes to their price target of CA$41.36, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. 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. There are some variant perceptions on Russel Metals, with the most bullish analyst valuing it at CA$45.00 and the most bearish at CA$36.00 per share. This is a very narrow spread of estimates, implying either that Russel Metals is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
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 Russel Metals' revenue growth is expected to slow, with the forecast 1.3% annualised growth rate until the end of 2022 being well below the historical 2.6% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 3.2% per year. Factoring in the forecast slowdown in growth, it seems obvious that Russel Metals is also expected to grow slower than other industry participants.
The Bottom Line
The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for this year. Pleasantly, analysts also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow slower than the wider market. The lack of change in the price target is puzzling, but with a serious upgrade to this year's earnings expectations, it might be time to take another look at Russel Metals.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple Russel Metals analysts - going out to 2024, and you can see them free on our platform here.
Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
