Analysts Just Made A Decent Upgrade To Their Whitehaven Coal Limited (ASX:WHC) Forecasts

Whitehaven Coal Limited (ASX:WHC) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with analysts modelling a real improvement in business performance.

Following the upgrade, the most recent consensus for Whitehaven Coal from its twelve analysts is for revenues of AU$4.9b in 2022 which, if met, would be a sizeable 111% increase on its sales over the past 12 months. The losses are expected to disappear over the next year or so, with forecasts for a profit of AU$1.94 per share this year. Previously, the analysts had been modelling revenues of AU$4.2b and earnings per share (EPS) of AU$1.62 in 2022. So we can see there's been a pretty clear increase in analyst sentiment in recent times, with both revenues and earnings per share receiving a decent lift in the latest estimates.

See our latest analysis for Whitehaven Coal

It will come as no surprise to learn that the analysts have increased their price target for Whitehaven Coal 17% to AU$7.32 on the back of these upgrades. 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. There are some variant perceptions on Whitehaven Coal, with the most bullish analyst valuing it at AU$9.00 and the most bearish at AU$5.75 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 Whitehaven Coal shareholders.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. For example, we noticed that Whitehaven Coal's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 3x growth to the end of 2022 on an annualised basis. That is well above its historical decline of 0.7% a year over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 8.2% annually. So it looks like Whitehaven Coal is expected to grow faster than its competitors, at least for a while.

The Bottom Line

The most important thing to take away from this upgrade is that analysts upgraded their earnings per share estimates for this year, expecting improving business conditions. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. Given that the consensus looks almost universally bullish, with a substantial increase to forecasts and a higher price target, Whitehaven Coal could be worth investigating further.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Whitehaven Coal going out to 2025, and you can see them free on our platform here..

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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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.