Eldorado Gold Corporation Just Beat Earnings Expectations: Here's What Analysts Think Will Happen Next
Last week, you might have seen that Eldorado Gold Corporation (TSE:ELD) released its annual result to the market. The early response was not positive, with shares down 3.2% to CA$14.29 in the past week. It looks like a credible result overall - although revenues of US$1.0b were what the analysts expected, Eldorado Gold surprised by delivering a (statutory) profit of US$0.54 per share, an impressive 42% above what was forecast. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
See our latest analysis for Eldorado Gold
Taking into account the latest results, the most recent consensus for Eldorado Gold from six analysts is for revenues of US$1.16b in 2024. If met, it would imply a decent 15% increase on its revenue over the past 12 months. Statutory per share are forecast to be US$0.53, approximately in line with the last 12 months. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$1.16b and earnings per share (EPS) of US$0.73 in 2024. So there's definitely been a decline in sentiment after the latest results, noting the pretty serious reduction to new EPS forecasts.
The consensus price target held steady at CA$19.23, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Eldorado Gold, with the most bullish analyst valuing it at CA$25.99 and the most bearish at CA$13.39 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.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's clear from the latest estimates that Eldorado Gold's rate of growth is expected to accelerate meaningfully, with the forecast 15% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 12% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 12% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Eldorado Gold is expected to grow much faster than its industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Eldorado Gold. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that in mind, we wouldn't be too quick to come to a conclusion on Eldorado Gold. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Eldorado Gold analysts - going out to 2026, and you can see them free on our platform here.
Even so, be aware that Eldorado Gold is showing 1 warning sign in our investment analysis , you should know about...
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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.
