Regis Resources Limited (ASX:RRL) last week reported its latest half-year results, which makes it a good time for investors to dive in and see if the business is performing in line with expectations. It was a pretty mixed result, with revenues beating expectations to hit AU$371m. Statutory earnings fell 7.5% short of analyst forecasts, reaching AU$0.32 per share. This is an important time for investors, as they can track a company's performance in its report, look at what top analysts are forecasting for next year, and see if there has been any change to expectations for the business. We've gathered the most recent statutory forecasts to see whether analysts have changed their earnings models, following these results.
Taking into account the latest results, the current consensus from Regis Resources's twelve analysts is for revenues of AU$769.5m in 2020, which would reflect a solid 8.5% increase on its sales over the past 12 months. Statutory earnings per share are expected to step up 18% to AU$0.41. Before this earnings report, analysts had been forecasting revenues of AU$770.2m and earnings per share (EPS) of AU$0.43 in 2020. Analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share forecasts for next year.
The consensus price target held steady at AU$4.60, with analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. 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. Currently, the most bullish analyst values Regis Resources at AU$5.72 per share, while the most bearish prices it at AU$3.60. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Regis Resources shareholders.
It can be useful to take a broader overview by seeing how analyst forecasts compare, both to the Regis Resources's past performance and to peers in the same market. We can infer from the latest estimates that analysts are expecting a continuation of Regis Resources's historical trends, as next year's forecast 8.5% revenue growth is roughly in line with 9.7% annual revenue growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 1.4% per year. So it's pretty clear that Regis Resources is forecast to grow substantially 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 Regis Resources. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - and our data does suggest that Regis Resources's revenues are expected to grow faster than the wider market. The consensus price target held steady at AU$4.60, with the latest estimates not enough to have an impact on analysts' estimated valuations.
With that in mind, we wouldn't be too quick to come to a conclusion on Regis Resources. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Regis Resources analysts - going out to 2023, and you can see them free on our platform here.
We also provide an overview of the Regis Resources Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.
If you spot an error that warrants correction, please contact the editor at email@example.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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