Capricorn Metals Ltd Just Missed Earnings - But Analysts Have Updated Their Models

Last week, you might have seen that Capricorn Metals Ltd (ASX:CMM) released its yearly result to the market. The early response was not positive, with shares down 6.8% to AU$4.23 in the past week. Statutory earnings per share fell badly short of expectations, coming in at AU$0.012, some 95% below analyst forecasts, although revenues were okay, approximately in line with analyst estimates at AU$321m. 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.

See our latest analysis for Capricorn Metals

Taking into account the latest results, the most recent consensus for Capricorn Metals from six analysts is for revenues of AU$358.3m in 2024. If met, it would imply a meaningful 12% increase on its revenue over the past 12 months. Per-share earnings are expected to soar 2,175% to AU$0.27. Before this earnings report, the analysts had been forecasting revenues of AU$353.6m and earnings per share (EPS) of AU$0.27 in 2024. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a small dip in their earnings per share forecasts.

It might be a surprise to learn that the consensus price target was broadly unchanged at AU$4.89, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Capricorn Metals, with the most bullish analyst valuing it at AU$5.40 and the most bearish at AU$4.40 per share. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.

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. We would highlight that Capricorn Metals' revenue growth is expected to slow, with the forecast 12% annualised growth rate until the end of 2024 being well below the historical 79% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 3.3% annually. So it's pretty clear that, while Capricorn Metals' 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 Capricorn Metals. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target held steady at AU$4.89, 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. We have estimates - from multiple Capricorn Metals analysts - going out to 2026, and you can see them free on our platform here.

It is also worth noting that we have found 1 warning sign for Capricorn Metals that you need to take into consideration.

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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.