The full-year results for New Hope Corporation Limited (ASX:NHC) were released last week, making it a good time to revisit its performance. Things were not great overall, with a surprise (statutory) loss of AU$0.19 per share on revenues of AU$1.1b, even though the analysts had been expecting a profit. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
After the latest results, the consensus from New Hope's five analysts is for revenues of AU$810.5m in 2021, which would reflect a sizeable 25% decline in sales compared to the last year of performance. Statutory losses are forecast to balloon 90% to AU$0.019 per share. In the lead-up to this report, the analysts had been modelling revenues of AU$890.1m and earnings per share (EPS) of AU$0.10 in 2021. There looks to have been a significant drop in sentiment regarding New Hope's prospects after these latest results, with a small dip in revenues and the analysts now forecasting a loss instead of a profit.
The consensus price target fell 10% to AU$1.62, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook. 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 New Hope, with the most bullish analyst valuing it at AU$2.20 and the most bearish at AU$1.10 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the 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. These estimates imply that sales are expected to slow, with a forecast revenue decline of 25%, a significant reduction from annual growth of 22% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 5.0% annually for the foreseeable future. It's pretty clear that New Hope's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts are expecting New Hope to become unprofitable next year. Unfortunately, they also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. 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 New Hope. 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 New Hope going out to 2025, and you can see them free on our platform here..
You can also see whether New Hope is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
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. 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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