BlueScope Steel Limited Just Beat EPS By 7.1%: Here's What Analysts Think Will Happen Next

A week ago, BlueScope Steel Limited (ASX:BSL) came out with a strong set of annual numbers that could potentially lead to a re-rate of the stock. The company beat expectations with revenues of AU$19b arriving 5.3% ahead of forecasts. Statutory earnings per share (EPS) were AU$5.72, 7.1% ahead of 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

View our latest analysis for BlueScope Steel

After the latest results, the consensus from BlueScope Steel's 14 analysts is for revenues of AU$17.1b in 2023, which would reflect an uneasy 10% decline in sales compared to the last year of performance. Statutory earnings per share are forecast to plummet 61% to AU$2.47 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of AU$16.4b and earnings per share (EPS) of AU$2.60 in 2023. So it's pretty clear consensus is mixed on BlueScope Steel after the latest results; whilethe analysts lifted revenue numbers, they also administered a minor downgrade to per-share earnings expectations.

The consensus price target was unchanged at AU$20.55, suggesting the business is performing roughly in line with expectations, despite some adjustments to profit and revenue forecasts. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on BlueScope Steel, with the most bullish analyst valuing it at AU$24.30 and the most bearish at AU$13.00 per share. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

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. We would highlight that sales are expected to reverse, with a forecast 10% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 8.8% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 1.1% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - BlueScope Steel is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, they also upgraded their revenue estimates, although our data indicates sales are expected to perform worse 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. At Simply Wall St, we have a full range of analyst estimates for BlueScope Steel going out to 2025, and you can see them free on our platform here..

Don't forget that there may still be risks. For instance, we've identified 2 warning signs for BlueScope Steel (1 is a bit unpleasant) 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.