New Hope Corporation Limited (ASX:NHC) Just Released Its Half-Yearly Results And Analysts Are Updating Their Estimates

Investors in New Hope Corporation Limited (ASX:NHC) had a good week, as its shares rose 3.4% to close at AU$1.36 following the release of its half-year results. It was a negative result overall, with revenues coming in 16% less than what the analysts expected, at AU$406m. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. 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 New Hope

Taking into account the latest results, the most recent consensus for New Hope from four analysts is for revenues of AU$924.0m in 2021 which, if met, would be an okay 6.1% increase on its sales over the past 12 months. Earnings are expected to improve, with New Hope forecast to report a statutory profit of AU$0.03 per share. In the lead-up to this report, the analysts had been modelling revenues of AU$890.5m and earnings per share (EPS) of AU$0.053 in 2021. So it's pretty clear the analysts have mixed opinions on New Hope after the latest results; even though they upped their revenue numbers, it came at the cost of a large cut to per-share earnings expectations.

There's been no major changes to the price target of AU$1.64, suggesting that the impact of higher forecast sales and lower earnings won't result in a meaningful change to the business' valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on New Hope, with the most bullish analyst valuing it at AU$2.05 and the most bearish at AU$1.30 per share. 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 New Hope shareholders.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We can infer from the latest estimates that forecasts expect a continuation of New Hope'shistorical trends, as the 12% annualised revenue growth to the end of 2021 is roughly in line with the 15% annual revenue growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 6.3% per year. So although New Hope is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for New Hope. Happily, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider industry. 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.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple New Hope analysts - going out to 2023, 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 New Hope you should be aware of.

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