West African Resources Limited Earnings Missed Analyst Estimates: Here's What Analysts Are Forecasting Now
Investors in West African Resources Limited (ASX:WAF) had a good week, as its shares rose 3.0% to close at AU$0.85 following the release of its half-yearly results. It was not a great result overall. Although revenues beat expectations, hitting AU$310m, statutory earnings missed analyst forecasts by 10%, coming in at just AU$0.072 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on West African Resources after the latest results.
Check out our latest analysis for West African Resources
Taking into account the latest results, the most recent consensus for West African Resources from four analysts is for revenues of AU$625.0m in 2023. If met, it would imply a credible 4.9% increase on its revenue over the past 12 months. Per-share earnings are expected to accumulate 3.1% to AU$0.14. Yet prior to the latest earnings, the analysts had been anticipated revenues of AU$590.0m and earnings per share (EPS) of AU$0.14 in 2023. It looks like there's been a modest increase in sentiment following the latest results, withthe analysts becoming a bit more optimistic in their predictions for both revenues and earnings.
Althoughthe analysts have upgraded their earnings estimates, there was no change to the consensus price target of AU$1.58, suggesting that the forecast performance does not have a long term impact on the company's valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic West African Resources analyst has a price target of AU$2.00 per share, while the most pessimistic values it at AU$1.29. 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.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that West African Resources' revenue growth is expected to slow, with the forecast 10% annualised growth rate until the end of 2023 being well below the historical 46% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 2.8% annually. Even after the forecast slowdown in growth, it seems obvious that West African Resources is also expected to grow faster than the wider industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards West African Resources 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 AU$1.58, 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 West African Resources. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for West African Resources going out to 2025, and you can see them free on our platform here..
It is also worth noting that we have found 1 warning sign for West African Resources that you need to take into consideration.
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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.
