It's shaping up to be a tough period for Steppe Cement Ltd. (LON:STCM), which a week ago released some disappointing 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 US$80m, statutory earnings missed forecasts by an incredible 27%, coming in at just US$0.044 per share. Following the result, the analyst has 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 analyst is expecting for next year.
Taking into account the latest results, the current consensus, from the one analyst covering Steppe Cement, is for revenues of US$71.3m in 2020, which would reflect a definite 11% reduction in Steppe Cement's sales over the past 12 months. Statutory earnings per share are forecast to tumble 43% to US$0.025 in the same period. In the lead-up to this report, the analyst had been modelling revenues of US$84.0m and earnings per share (EPS) of US$0.06 in 2020. Indeed, we can see that the analyst is a lot more bearish about Steppe Cement's prospects following the latest results, administering a real cut to revenue estimates and slashing their EPS estimates to boot.
The analyst made no major changes to their price target of US$0.51, suggesting the downgrades are not expected to have a long-term impact on Steppe Cement'svaluation.
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. Over the past five years, revenues have declined around 6.5% annually. Worse, forecasts are essentially predicting the decline to accelerate, with the estimate for a 11% decline in revenue next year. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 2.2% per year. So while a broad number of companies are forecast to decline, unfortunately Steppe Cement is expected to see its sales affected worse than other companies in the industry.
The Bottom Line
The most important thing to take away is that the analyst downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider industry. The consensus price target held steady at US$0.51, with the latest estimates not enough to have an impact on their price target.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have analyst estimates for Steppe Cement going out as far as 2024, and you can see them free on our platform here.
Don't forget that there may still be risks. For instance, we've identified 3 warning signs for Steppe Cement that you should be aware of.
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