Karora Resources Inc. Just Beat EPS By 39%: Here's What Analysts Think Will Happen Next
Karora Resources Inc. (TSE:KRR) just released its latest yearly results and things are looking bullish. It was overall a positive result, with revenues beating expectations by 3.0% to hit CA$239m. Karora Resources also reported a statutory profit of CA$0.61, which was an impressive 39% above what the analysts had forecast. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
See our latest analysis for Karora Resources
Taking into account the latest results, the current consensus from Karora Resources' four analysts is for revenues of CA$285.7m in 2021, which would reflect a decent 19% increase on its sales over the past 12 months. Per-share earnings are expected to climb 13% to CA$0.71. Yet prior to the latest earnings, the analysts had been anticipated revenues of CA$291.0m and earnings per share (EPS) of CA$0.68 in 2021. So the consensus seems to have become somewhat more optimistic on Karora Resources' earnings potential following these results.
The consensus price target was unchanged at CA$6.52, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. 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. Currently, the most bullish analyst values Karora Resources at CA$8.50 per share, while the most bearish prices it at CA$5.50. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
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. It's pretty clear that there is an expectation that Karora Resources' revenue growth will slow down substantially, with revenues to the end of 2021 expected to display 19% growth on an annualised basis. This is compared to a historical growth rate of 45% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 6.0% annually. So it's pretty clear that, while Karora Resources' revenue growth is expected to slow, it's still expected to grow faster than the industry itself.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Karora Resources 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.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Karora Resources going out to 2023, and you can see them free on our platform here.
Plus, you should also learn about the 3 warning signs we've spotted with Karora Resources (including 2 which make us uncomfortable) .
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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