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Hudbay Minerals Inc. (TSE:HBM) shareholders are probably feeling a little disappointed, since its shares fell 5.1% to CA$9.96 in the week after its latest first-quarter results. Revenues fell 9.8% short of expectations, at US$314m. Earnings correspondingly dipped, with Hudbay Minerals reporting a statutory loss of US$0.23 per share, whereas the analysts had previously modelled a profit in this period. 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 collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Taking into account the latest results, the consensus forecast from Hudbay Minerals' 16 analysts is for revenues of US$1.49b in 2021, which would reflect a huge 28% improvement in sales compared to the last 12 months. Earnings are expected to improve, with Hudbay Minerals forecast to report a statutory profit of US$0.43 per share. In the lead-up to this report, the analysts had been modelling revenues of US$1.47b and earnings per share (EPS) of US$0.44 in 2021. The analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share numbers for next year.
It might be a surprise to learn that the consensus price target was broadly unchanged at US$10.74, 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. Currently, the most bullish analyst values Hudbay Minerals at US$14.50 per share, while the most bearish prices it at US$9.01. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that Hudbay Minerals' rate of growth is expected to accelerate meaningfully, with the forecast 39% annualised revenue growth to the end of 2021 noticeably faster than its historical growth of 0.08% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 4.3% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Hudbay Minerals is expected to grow much faster than its 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. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are 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.
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. At Simply Wall St, we have a full range of analyst estimates for Hudbay Minerals going out to 2025, and you can see them free on our platform here..
You can also see whether Hudbay Minerals 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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