Revenue Beat: GrainCorp Limited Exceeded Revenue Forecasts By 7.4% And Analysts Are Updating Their Estimates

Shareholders might have noticed that GrainCorp Limited (ASX:GNC) filed its full-year result this time last week. The early response was not positive, with shares down 5.8% to AU$7.83 in the past week. GrainCorp beat revenue expectations by 7.4%, recording sales of AU$7.9b. Statutory earnings per share (EPS) came in at AU$1.67, some 3.4% short of analyst estimates. 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 gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

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Following the recent earnings report, the consensus from eleven analysts covering GrainCorp is for revenues of AU$6.51b in 2023, implying a not inconsiderable 17% decline in sales compared to the last 12 months. Statutory earnings per share are forecast to plummet 45% to AU$0.94 in the same period. Before this earnings report, the analysts had been forecasting revenues of AU$6.43b and earnings per share (EPS) of AU$0.95 in 2023. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.

There were no changes to revenue or earnings estimates or the price target of AU$8.79, suggesting that the company has met expectations in its recent result. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values GrainCorp at AU$10.80 per share, while the most bearish prices it at AU$6.70. 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 GrainCorp shareholders.

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 would highlight that sales are expected to reverse, with a forecast 17% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 12% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 2.9% annually for the foreseeable future. It's pretty clear that GrainCorp's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. The consensus price target held steady at AU$8.79, with the latest estimates not enough to have an impact on their price targets.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for GrainCorp going out to 2025, and you can see them free on our platform here..

You should always think about risks though. Case in point, we've spotted 2 warning signs for GrainCorp you should be aware of, and 1 of them is a bit concerning.

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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.