Yahoo Finance Results: Lundin Mining Corporation Beat Earnings Expectations And Analysts Now Have New Forecasts
It's been a good week for Lundin Mining Corporation (TSE:LUN) shareholders, because the company has just released its latest full-year results, and the shares gained 2.6% to CA$7.52. Revenues were US$1.9b, approximately in line with expectations, although statutory earnings per share (EPS) performed substantially better. EPS of US$0.23 were also better than expected, beating analyst predictions by 17%. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Check out our latest analysis for Lundin Mining
After the latest results, the 16 analysts covering Lundin Mining are now predicting revenues of US$2.38b in 2020. If met, this would reflect a substantial 26% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to surge 71% to US$0.39. Yet prior to the latest earnings, analysts had been forecasting revenues of US$2.41b and earnings per share (EPS) of US$0.44 in 2020. So there's definitely been a decline in analyst sentiment after the latest results, noting the substantial drop in new EPS forecasts.
It might be a surprise to learn that the consensus price target was broadly unchanged at US$7.07, with analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. The consensus price target just an average of individual analyst targets, so - considering that the price target changed, it would be handy to see how wide the range of underlying estimates is. The most optimistic Lundin Mining analyst has a price target of US$8.30 per share, while the most pessimistic values it at US$5.28. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
Another way to assess these estimates is by comparing them to past performance, and seeing whether analysts are more or less bullish relative to other companies in the market. Analysts are definitely expecting Lundin Mining's growth to accelerate, with the forecast 26% growth ranking favourably alongside historical growth of 5.9% 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 6.0% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Lundin Mining is expected to grow much faster than its market.
The Bottom Line
The biggest concern with the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Lundin Mining. Happily, there were no major changes to revenue forecasts, with analysts still expecting the business to grow faster than the wider market. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that in mind, we wouldn't be too quick to come to a conclusion on Lundin Mining. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Lundin Mining going out to 2024, and you can see them free on our platform here..
It might also be worth considering whether Lundin Mining's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.
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