Nufarm Limited Earnings Missed Analyst Estimates: Here's What Analysts Are Forecasting Now
It's shaping up to be a tough period for Nufarm Limited (ASX:NUF), which a week ago released some disappointing half-yearly results that could have a notable impact on how the market views the stock. It wasn't a great result overall - while revenue fell marginally short of analyst estimates at AU$1.5b, statutory earnings missed forecasts by 13%, coming in at just AU$0.074 per share. 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.
See our latest analysis for Nufarm
Taking into account the latest results, the current consensus, from the eleven analysts covering Nufarm, is for revenues of AU$3.46b in 2020, which would reflect a perceptible 4.9% reduction in Nufarm's sales over the past 12 months. Statutory losses are anticipated to increase substantially, hitting AU$0.19 per share. In the lead-up to this report, the analysts had been modelling revenues of AU$3.51b and earnings per share (EPS) of AU$0.049 in 2020. So despite reconfirming their revenue estimates, the analysts are now forecasting a loss instead of a profit, which looks like a definite drop in sentiment following the latest results.
The consensus price target held steady at AU$5.62, seemingly implying that the higher forecast losses are not expected to have a long term impact on the company's valuation. 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 Nufarm, with the most bullish analyst valuing it at AU$7.00 and the most bearish at AU$4.60 per share. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that sales are expected to slow, with a forecast revenue decline of 4.9%, a significant reduction from annual growth of 6.0% 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 6.2% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Nufarm is expected to lag the wider industry.
The Bottom Line
The biggest low-light for us was that the forecasts for Nufarm dropped from profits to a loss next year. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Nufarm's revenues are expected to perform worse than the wider industry. The consensus price target held steady at AU$5.62, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn't be too quick to come to a conclusion on Nufarm. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Nufarm analysts - going out to 2022, and you can see them free on our platform here.
We don't want to rain on the parade too much, but we did also find 3 warning signs for Nufarm (1 is a bit concerning!) that you need to be mindful of.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.
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