AU$11.72 - That's What Analysts Think ALS Limited (ASX:ALQ) Is Worth After These Results

It's been a pretty great week for ALS Limited (ASX:ALQ) shareholders, with its shares surging 10% to AU$12.00 in the week since its latest yearly results. ALS reported in line with analyst predictions, delivering revenues of AU$1.8b and statutory earnings per share of AU$0.36, suggesting the business is executing well and in line with its plan. Following the result, the analysts have 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

See our latest analysis for ALS

Taking into account the latest results, the consensus forecast from ALS' 13 analysts is for revenues of AU$1.95b in 2022, which would reflect a meaningful 11% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to jump 32% to AU$0.47. In the lead-up to this report, the analysts had been modelling revenues of AU$1.94b and earnings per share (EPS) of AU$0.44 in 2022. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

The consensus price target rose 14% to AU$11.72, suggesting that higher earnings estimates flow through to the stock's valuation as well. 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. Currently, the most bullish analyst values ALS at AU$13.85 per share, while the most bearish prices it at AU$5.50. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

Of course, another way to look at these forecasts is to place them into context against the industry itself. The period to the end of 2022 brings more of the same, according to the analysts, with revenue forecast to display 11% growth on an annualised basis. That is in line with its 9.4% annual growth over the past five years. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 6.9% annually. So it's pretty clear that ALS is forecast to grow substantially faster than its 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 ALS following these results. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

With that in mind, we wouldn't be too quick to come to a conclusion on ALS. 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 ALS going out to 2024, and you can see them free on our platform here..

You still need to take note of risks, for example - ALS has 3 warning signs we think you should be aware of.

If you decide to trade ALS, use the lowest-cost* platform that is rated #1 Overall by Barron’s, Interactive Brokers. Trade stocks, options, futures, forex, bonds and funds on 135 markets, all from a single integrated account. Promoted

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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.