Earnings Miss: Karora Resources Inc. Missed EPS By 58% And Analysts Are Revising Their Forecasts
Investors in Karora Resources Inc. (TSE:KRR) had a good week, as its shares rose 2.6% to close at CA$4.76 following the release of its yearly results. Statutory earnings per share fell badly short of expectations, coming in at CA$0.05, some 58% below analyst forecasts, although revenues were okay, approximately in line with analyst estimates at CA$416m. Following the result, the 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Karora Resources after the latest results.
View our latest analysis for Karora Resources
After the latest results, the five analysts covering Karora Resources are now predicting revenues of CA$492.4m in 2024. If met, this would reflect a meaningful 18% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to jump 421% to CA$0.26. In the lead-up to this report, the analysts had been modelling revenues of CA$483.7m and earnings per share (EPS) of CA$0.31 in 2024. The analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a substantial drop in EPS estimates.
It might be a surprise to learn that the consensus price target was broadly unchanged at CA$7.01, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Karora Resources analyst has a price target of CA$7.75 per share, while the most pessimistic values it at CA$6.50. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.
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 Karora Resources' revenue growth is expected to slow, with the forecast 18% annualised growth rate until the end of 2024 being well below the historical 25% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 11% annually. So it's pretty clear that, while Karora Resources' revenue growth is expected to slow, it's still expected to grow faster than the industry itself.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Karora Resources. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target held steady at CA$7.01, with the latest estimates not enough to have an impact on their price targets.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Karora Resources going out to 2026, and you can see them free on our platform here.
It is also worth noting that we have found 3 warning signs for Karora Resources that you need to take into consideration.
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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.
