Yahoo Finance Some Karora Resources Inc. (TSE:KRR) Analysts Just Made A Major Cut To Next Year's Estimates
One thing we could say about the analysts on Karora Resources Inc. (TSE:KRR) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting analysts have soured majorly on the business.
Following the downgrade, the current consensus from Karora Resources' five analysts is for revenues of CA$285m in 2022 which - if met - would reflect a credible 8.0% increase on its sales over the past 12 months. Statutory earnings per share are anticipated to crater 32% to CA$0.12 in the same period. Before this latest update, the analysts had been forecasting revenues of CA$320m and earnings per share (EPS) of CA$0.38 in 2022. It looks like analyst sentiment has declined substantially, with a substantial drop in revenue estimates and a pretty serious decline to earnings per share numbers as well.
View our latest analysis for Karora Resources
Analysts made no major changes to their price target of CA$7.39, suggesting the downgrades are not expected to have a long-term impact on Karora Resources' valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Karora Resources analyst has a price target of CA$8.50 per share, while the most pessimistic values it at CA$6.50. This is a very narrow spread of estimates, implying either that Karora Resources 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 Karora Resources' revenue growth is expected to slow, with the forecast 11% annualised growth rate until the end of 2022 being well below the historical 35% 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 7.4% annually. Even after the forecast slowdown in growth, it seems obvious that Karora Resources is also expected to grow faster than the wider industry.
The Bottom Line
The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for Karora Resources. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. The lack of change in the price target is puzzling in light of the downgrade but, with a serious decline expected this year, we wouldn't be surprised if investors were a bit wary of Karora Resources.
Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Karora Resources analysts - going out to 2024, and you can see them free on our platform here.
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks 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.
