Kirkland Lake Gold Ltd. (TSE:KL) came out with its yearly results last week, and we wanted to see how the business is performing and what top analysts think of the company following this report. Revenues came in 2.0% below expectations, at US$1.4b. Statutory earnings per share were relatively better off, with a per-share profit of US$2.70 being roughly in line with analyst estimates. Following the result, 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. We thought readers would find it interesting to see analysts' latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the most recent consensus for Kirkland Lake Gold from seven analysts is for revenues of US$2.40b in 2020, which is a sizeable 74% increase on its sales over the past 12 months. Statutory earnings per share are forecast to dip 6.6% to US$2.49 in the same period. Yet prior to the latest earnings, analysts had been forecasting revenues of US$2.36b and earnings per share (EPS) of US$2.53 in 2020. So it's pretty clear that, although analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
Analysts reconfirmed their price target of CA$60.11, showing that the business is executing well and in line with expectations. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Kirkland Lake Gold analyst has a price target of CA$70.00 per share, while the most pessimistic values it at CA$55.00. Still, with such a tight range of estimates, it suggests analysts have a pretty good idea of what they think the company is worth.
Another way to assess these estimates is by comparing them to past performance, and seeing whether analysts are more or less bullish relative to other companies in the market. It's clear from the latest estimates that Kirkland Lake Gold's rate of growth is expected to accelerate meaningfully, with forecast 74% revenue growth noticeably faster than its historical growth of 37%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 6.1% per year. It seems obvious that, while the growth outlook is brighter than the recent past, analysts also expect Kirkland Lake Gold to grow faster than the wider market.
The Bottom Line
The most obvious conclusion from these results is that there's been no major change in the business' prospects in recent times, with analysts holding earnings per share steady, in line with previous estimates. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - and our data does suggest that Kirkland Lake Gold's revenues are expected to grow faster than the wider market. 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 said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Kirkland Lake Gold analysts - going out to 2023, and you can see them free on our platform here.
We also provide an overview of the Kirkland Lake Gold Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.
If you spot an error that warrants correction, please contact the editor at email@example.com. 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. Simply Wall St has no position in the stocks mentioned.
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