There's been a notable change in appetite for Carbon Revolution Limited (ASX:CBR) shares in the week since its half-year report, with the stock down 11% to AU$2.24. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Taking into account the latest results, the consensus forecast from Carbon Revolution's dual analysts is for revenues of AU$45.8m in 2021, which would reflect a sizeable 27% improvement in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 72% to AU$0.06. Before this earnings announcement, the analysts had been modelling revenues of AU$47.0m and losses of AU$0.04 per share in 2021. So it's pretty clear the analysts have mixed opinions on Carbon Revolution after this update; revenues were downgraded and per-share losses expected to increase.
The average price target fell 5.0% to AU$3.11, implicitly signalling that lower earnings per share are a leading indicator for Carbon Revolution's valuation.
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 can infer from the latest estimates that forecasts expect a continuation of Carbon Revolution'shistorical trends, as next year's 27% revenue growth is roughly in line with 23% annual revenue growth over the past year. Compare this with the wider industry, which analyst estimates (in aggregate) suggest will see revenues grow 12% next year. So it's pretty clear that Carbon Revolution is forecast to grow substantially faster than its industry.
The Bottom Line
The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Carbon Revolution. They also downgraded their revenue estimates, although industry data suggests that Carbon Revolution's revenues are expected to grow faster than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
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 Carbon Revolution going out as far as 2025, and you can see them free on our platform here.
Before you take the next step you should know about the 3 warning signs for Carbon Revolution that we have uncovered.
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