Lundin Gold Inc. (TSE:LUG) Just Released Its Second-Quarter Results And Analysts Are Updating Their Estimates

Simply Wall St
3 min read
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Investors in Lundin Gold Inc. (TSE:LUG) had a good week, as its shares rose 7.7% to close at CA$11.50 following the release of its quarterly results. Revenues came in at US$218m, an impressive 29% ahead of analyst forecasts. Following the result, the 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

Check out our latest analysis for Lundin Gold

earnings-and-revenue-growth
earnings-and-revenue-growth

Taking into account the latest results, the current consensus from Lundin Gold's seven analysts is for revenues of US$733.4m in 2021, which would reflect a solid 10% increase on its sales over the past 12 months. Per-share earnings are expected to accumulate 3.2% to US$0.73. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$717.3m and earnings per share (EPS) of US$0.79 in 2021. Overall it looks as though the analysts were a bit mixed on the latest results. Although there was a a solid to revenue, the consensus also made a minor downgrade to its earnings per share forecasts.

The consensus price target was unchanged at CA$14.65, suggesting the business is performing roughly in line with expectations, despite some adjustments to profit and revenue forecasts. 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. There are some variant perceptions on Lundin Gold, with the most bullish analyst valuing it at CA$16.00 and the most bearish at CA$12.75 per share. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Lundin Gold is an easy business to forecast or the the analysts are all using similar assumptions.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that Lundin Gold's revenue growth is expected to slow, with the forecast 22% annualised growth rate until the end of 2021 being well below the historical 1,229% growth over the last year. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 3.6% annually. So it's pretty clear that, while Lundin Gold's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

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. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. The consensus price target held steady at CA$14.65, with the latest estimates not enough to have an impact on their price targets.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Lundin Gold going out to 2023, and you can see them free on our platform here..

Plus, you should also learn about the 2 warning signs we've spotted with Lundin Gold (including 1 which can't be ignored) .

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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