Earnings Miss: Cleanaway Waste Management Limited Missed EPS By 8.2% And Analysts Are Revising Their Forecasts

Investors in Cleanaway Waste Management Limited (ASX:CWY) had a good week, as its shares rose 5.6% to close at AU$2.66 following the release of its annual results. Cleanaway Waste Management beat revenue expectations by 4.5%, recording sales of AU$2.4b. Statutory earnings per share (EPS) came in at AU$0.07, some 8.2% short of analyst estimates. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

Check out our latest analysis for Cleanaway Waste Management

Following the latest results, Cleanaway Waste Management's eleven analysts are now forecasting revenues of AU$2.59b in 2022. This would be a reasonable 7.4% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to expand 11% to AU$0.079. Yet prior to the latest earnings, the analysts had been anticipated revenues of AU$2.45b and earnings per share (EPS) of AU$0.087 in 2022. Overall it looks as though the analysts were a bit mixed on the latest results. Although there was a a reasonable to revenue, the consensus also made a minor downgrade to its earnings per share forecasts.

Curiously, the consensus price target rose 5.4% to AU$2.77. We can only conclude that the forecast revenue growth is expected to offset the impact of the expected fall in earnings. 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. Currently, the most bullish analyst values Cleanaway Waste Management at AU$3.30 per share, while the most bearish prices it at AU$2.10. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

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. It's pretty clear that there is an expectation that Cleanaway Waste Management's revenue growth will slow down substantially, with revenues to the end of 2022 expected to display 7.4% growth on an annualised basis. This is compared to a historical growth rate of 13% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 4.7% annually. So it's pretty clear that, while Cleanaway Waste Management's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Cleanaway Waste Management. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is 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.

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 estimates - from multiple Cleanaway Waste Management analysts - going out to 2024, and you can see them free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 1 warning sign for Cleanaway Waste Management that you should be aware of.

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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.
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