What Does The Future Hold For Ramaco Resources, Inc. (NASDAQ:METC)? These Analysts Have Been Cutting Their Estimates
The latest analyst coverage could presage a bad day for Ramaco Resources, Inc. (NASDAQ:METC), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.
After the downgrade, the four analysts covering Ramaco Resources are now predicting revenues of US$584m in 2023. If met, this would reflect a notable 13% improvement in sales compared to the last 12 months. Per-share earnings are expected to step up 12% to US$3.06. Before this latest update, the analysts had been forecasting revenues of US$670m and earnings per share (EPS) of US$4.23 in 2023. It looks like analyst sentiment has declined substantially, with a measurable cut to revenue estimates and a pretty serious decline to earnings per share numbers as well.
See our latest analysis for Ramaco Resources
The consensus price target fell 9.3% to US$11.65, with the weaker earnings outlook clearly leading analyst valuation estimates. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Ramaco Resources, with the most bullish analyst valuing it at US$15.00 and the most bearish at US$5.25 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that Ramaco Resources' revenue growth is expected to slow, with the forecast 10% annualised growth rate until the end of 2023 being well below the historical 26% p.a. growth over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue shrink 0.3% per year. Factoring in the forecast slowdown in growth, it's pretty clear that Ramaco Resources is still expected to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Sadly they also cut their revenue estimates, although at least the company is expected to perform a bit better than the wider market. Furthermore, there was a cut to the price target, suggesting that the latest news has led to more pessimism about the intrinsic value of the business. Given the stark change in sentiment, we'd understand if investors became more cautious on Ramaco Resources after today.
As you can see, the analysts clearly aren't bullish, and there might be good reason for that. We've identified some potential issues with Ramaco Resources' financials, such as concerns around earnings quality. For more information, you can click here to discover this and the 1 other warning sign we've identified.
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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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