Earnings Miss: Thungela Resources Limited Missed EPS By 8.3% And Analysts Are Revising Their Forecasts
It's been a good week for Thungela Resources Limited (JSE:TGA) shareholders, because the company has just released its latest full-year results, and the shares gained 3.7% to R204. Revenues of R51b were in line with forecasts, although statutory earnings per share (EPS) came in below expectations at R127, missing estimates by 8.3%. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Thungela Resources after the latest results.
View our latest analysis for Thungela Resources
After the latest results, the consensus from Thungela Resources' six analysts is for revenues of R37.1b in 2023, which would reflect a painful 27% decline in sales compared to the last year of performance. Statutory earnings per share are expected to tumble 38% to R75.96 in the same period. In the lead-up to this report, the analysts had been modelling revenues of R41.4b and earnings per share (EPS) of R107 in 2023. It looks like sentiment has declined substantially in the aftermath of these results, with a real cut to revenue estimates and a large cut to earnings per share numbers as well.
The consensus price target fell 9.0% to R253, with the weaker earnings outlook clearly leading valuation estimates. 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. There are some variant perceptions on Thungela Resources, with the most bullish analyst valuing it at R335 and the most bearish at R211 per share. 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 Thungela Resources shareholders.
Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that sales are expected to reverse, with a forecast 27% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 93% over the last year. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue decline 3.7% annually for the foreseeable future. The forecasts do look bearish for Thungela Resources, since they're expecting it to shrink faster than the industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Unfortunately they also downgraded their revenue estimates, and our analysts estimates suggest that Thungela Resources is still expected to perform worse than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
With that in mind, we wouldn't be too quick to come to a conclusion on Thungela Resources. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Thungela Resources going out to 2025, and you can see them free on our platform here..
Even so, be aware that Thungela Resources is showing 3 warning signs in our investment analysis , and 1 of those doesn't sit too well with us...
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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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