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CSR Limited (ASX:CSR) Just Reported And Analysts Have Been Lifting Their Price Targets

Simply Wall St
·4 min read

CSR Limited (ASX:CSR) last week reported its latest half-yearly 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 credible result overall, with revenues of AU$1.1b and statutory earnings per share of AU$0.25 both in line with analyst estimates, showing that CSR is executing in line with expectations. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

View our latest analysis for CSR

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earnings-and-revenue-growth

After the latest results, the consensus from CSR's ten analysts is for revenues of AU$2.09b in 2021, which would reflect a noticeable 2.0% decline in sales compared to the last year of performance. Per-share earnings are expected to jump 30% to AU$0.31. Before this earnings report, the analysts had been forecasting revenues of AU$2.05b and earnings per share (EPS) of AU$0.26 in 2021. There's been a pretty noticeable increase in sentiment, with the analysts upgrading revenues and making a decent improvement in earnings per share in particular.

It will come as no surprise to learn that the analysts have increased their price target for CSR 15% to AU$4.63on the back of these upgrades. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic CSR analyst has a price target of AU$5.40 per share, while the most pessimistic values it at AU$3.50. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

Of course, another way to look at these forecasts is to place them into context against the industry itself. One more thing stood out to us about these estimates, and it's the idea that CSR'sdecline is expected to accelerate, with revenues forecast to fall 2.0% next year, topping off a historical decline of 1.3% a year 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 revenue grow 6.4% per year. So while a broad number of companies are forecast to decline, unfortunately CSR is expected to see its sales affected worse than other companies in the industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards CSR following these results. They also upgraded their revenue estimates for next year, even though sales are expected to grow slower than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

With that in mind, we wouldn't be too quick to come to a conclusion on CSR. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple CSR analysts - going out to 2025, and you can see them free on our platform here.

Before you take the next step you should know about the 3 warning signs for CSR (1 is potentially serious!) that we have uncovered.

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. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.