Last week, you might have seen that RHI Magnesita N.V. (LON:RHIM) released its interim result to the market. The early response was not positive, with shares down 5.8% to UK£19.81 in the past week. RHI Magnesita beat revenue forecasts by a solid 13% to hit €1.6b. Statutory earnings per share came in at €5.05, in line with expectations. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on RHI Magnesita after the latest results.
Following the latest results, RHI Magnesita's six analysts are now forecasting revenues of €3.21b in 2022. This would be a solid 8.9% improvement in sales compared to the last 12 months. Statutory earnings per share are forecast to tumble 27% to €3.79 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of €2.92b and earnings per share (EPS) of €4.18 in 2022. 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 small dip in its earnings per share forecasts.
The consensus price target was unchanged at UK£36.12, suggesting the business is performing roughly in line with expectations, despite some adjustments to profit and revenue forecasts. 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. The most optimistic RHI Magnesita analyst has a price target of UK£44.92 per share, while the most pessimistic values it at UK£23.96. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await RHI Magnesita shareholders.
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. The analysts are definitely expecting RHI Magnesita's growth to accelerate, with the forecast 19% annualised growth to the end of 2022 ranking favourably alongside historical growth of 3.1% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 3.7% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect RHI Magnesita to grow faster than the wider 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. Happily, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider industry. The consensus price target held steady at UK£36.12, with the latest estimates not enough to have an impact on their price targets.
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. We have estimates - from multiple RHI Magnesita analysts - going out to 2024, and you can see them free on our platform here.
And what about risks? Every company has them, and we've spotted 3 warning signs for RHI Magnesita (of which 2 can't be ignored!) you should know about.
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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.
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