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The analysts might have been a bit too bullish on Yamana Gold Inc. (TSE:YRI), given that the company fell short of expectations when it released its third-quarter results last week. It wasn't a great result overall - while revenue fell marginally short of analyst estimates at US$439m, statutory earnings missed forecasts by an incredible 29%, coming in at just US$0.06 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 Yamana Gold after the latest results.
Taking into account the latest results, the current consensus from Yamana Gold's 13 analysts is for revenues of US$2.01b in 2021, which would reflect a substantial 35% increase on its sales over the past 12 months. Statutory earnings per share are predicted to leap 351% to US$0.55. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$1.96b and earnings per share (EPS) of US$0.48 in 2021. There's been a pretty noticeable increase in sentiment, with the analysts upgrading revenues and making a nice gain to earnings per share in particular.
Despite these upgrades,the analysts have not made any major changes to their price target of US$7.40, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Yamana Gold, with the most bullish analyst valuing it at US$12.46 and the most bearish at US$5.80 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
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. For example, we noticed that Yamana Gold's rate of growth is expected to accelerate meaningfully, with revenues forecast to grow 35%, well above its historical decline of 2.4% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 6.0% per year. So it looks like Yamana Gold is expected to grow faster than its competitors, at least for a while.
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 Yamana Gold following these results. Happily, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that in mind, we wouldn't be too quick to come to a conclusion on Yamana Gold. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Yamana Gold analysts - going out to 2024, and you can see them free on our platform here.
It is also worth noting that we have found 2 warning signs for Yamana Gold that you need to take into consideration.
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. 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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