As you might know, OZ Minerals Limited (ASX:OZL) recently reported its yearly numbers. It was a credible result overall, with revenues of AU$1.1b and statutory earnings per share of AU$0.51 both in line with analyst estimates, showing that OZ Minerals is executing in line with expectations. This is an important time for investors, as they can track a company’s performance in its report, look at what top analysts are forecasting for next year, and see if there has been any change to expectations for the business. So we gathered the latest post-earnings forecasts to see what analysts’ statutory forecasts suggest is in store for next year.
Following the latest results, OZ Minerals’s 14 analysts are now forecasting revenues of AU$1.17b in 2020. This would be a reasonable 5.7% improvement in sales compared to the last 12 months. Statutory earnings per share are forecast to dive 33% to AU$0.34 in the same period. Yet prior to the latest earnings, analysts had been forecasting revenues of AU$1.24b and earnings per share (EPS) of AU$0.43 in 2020. Analysts seem less optimistic after the recent results, reducing their sales forecasts and making a pretty serious reduction to earnings per share forecasts.
Despite the cuts to forecast earnings, there was no real change to the AU$10.56 price target, showing that analysts don’t think the changes have a meaningful impact on the stock’s intrinsic value. 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 OZ Minerals analyst has a price target of AU$11.70 per share, while the most pessimistic values it at AU$8.00. 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 OZ Minerals shareholders.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. Next year brings more of the same, according to analysts, with revenue forecast to grow 5.7%, in line with its 6.3% annual growth over the past five years. Compare this with the wider market, which analyst estimates (in aggregate) suggest will see revenues grow 0.7% next year. So it’s pretty clear that OZ Minerals is forecast to grow substantially faster than its market.
The Bottom Line
The most important thing to take away is that analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider market. 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.
Still, the long-term prospects of the business are much more relevant than next year’s earnings. We have forecasts for OZ Minerals going out to 2024, and you can see them free on our platform here.
If you spot an error that warrants correction, please contact the editor at email@example.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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