Need To Know: This Analyst Just Made A Substantial Cut To Their Duxton Water Limited (ASX:D2O) Estimates
The latest analyst coverage could presage a bad day for Duxton Water Limited (ASX:D2O), with the covering analyst making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analyst seeing grey clouds on the horizon.
After this downgrade, Duxton Water's solitary analyst is now forecasting revenues of AU$26m in 2024. This would be a sizeable 22% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to leap 52% to AU$0.063. Previously, the analyst had been modelling revenues of AU$30m and earnings per share (EPS) of AU$0.078 in 2024. Indeed, we can see that the analyst is a lot more bearish about Duxton Water's prospects, administering a substantial drop in revenue estimates and slashing their EPS estimates to boot.
View our latest analysis for Duxton Water
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Duxton Water's past performance and to peers in the same industry. One thing stands out from these estimates, which is that Duxton Water is forecast to grow faster in the future than it has in the past, with revenues expected to display 22% annualised growth until the end of 2024. If achieved, this would be a much better result than the 29% annual decline over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 7.1% annually. So it looks like Duxton Water is expected to grow faster than its competitors, at least for a while.
The Bottom Line
The biggest issue in the new estimates is that the analyst has reduced their earnings per share estimates, suggesting business headwinds lay ahead for Duxton Water. While the analyst did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. After a cut like that, investors could be forgiven for thinking the analyst is a lot more bearish on Duxton Water, and a few readers might choose to steer clear of the stock.
After a downgrade like this, it's pretty clear that previous forecasts were too optimistic. What's more, we've spotted several possible issues with Duxton Water's business, like dilutive stock issuance over the past year. For more information, you can click here to discover this and the 3 other warning signs we've identified.
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
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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.
