Yahoo Finance Sherritt International Corporation Just Missed Earnings - But Analysts Have Updated Their Models
Shareholders might have noticed that Sherritt International Corporation (TSE:S) filed its full-year result this time last week. The early response was not positive, with shares down 8.2% to CA$0.56 in the past week. It looks like a pretty bad result, all things considered. Although revenues of CA$179m were in line with analyst predictions, statutory earnings fell badly short, missing estimates by 27% to hit CA$0.16 per share. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
See our latest analysis for Sherritt International
Taking into account the latest results, the three analysts covering Sherritt International provided consensus estimates of CA$142.0m revenue in 2023, which would reflect a concerning 21% decline on its sales over the past 12 months. Statutory per share are forecast to be CA$0.16, approximately in line with the last 12 months. In the lead-up to this report, the analysts had been modelling revenues of CA$143.7m and earnings per share (EPS) of CA$0.15 in 2023. So the consensus seems to have become somewhat more optimistic on Sherritt International's earnings potential following these results.
The consensus price target was unchanged at CA$0.99, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. 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 Sherritt International analyst has a price target of CA$1.50 per share, while the most pessimistic values it at CA$0.55. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
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. Over the past five years, revenues have declined around 10% annually. Worse, forecasts are essentially predicting the decline to accelerate, with the estimate for an annualised 21% decline in revenue until the end of 2023. Compare this against analyst estimates for companies in the broader industry, which suggest that revenues (in aggregate) are expected to grow 12% annually. So it's pretty clear that, while it does have declining revenues, the analysts also expect Sherritt International to suffer worse than the wider industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Sherritt International's earnings potential next year. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. 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 said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Sherritt International analysts - going out to 2025, and you can see them free on our platform here.
We don't want to rain on the parade too much, but we did also find 1 warning sign for Sherritt International that you need to be mindful of.
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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.
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