News Flash: 8 Analysts Think Iluka Resources Limited (ASX:ILU) Earnings Are Under Threat

The latest analyst coverage could presage a bad day for Iluka Resources Limited (ASX:ILU), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting analysts have soured majorly on the business.

After the downgrade, the consensus from Iluka Resources' eight analysts is for revenues of AU$1.3b in 2023, which would reflect a definite 15% decline in sales compared to the last year of performance. Statutory earnings per share are supposed to plummet 20% to AU$0.82 in the same period. Previously, the analysts had been modelling revenues of AU$1.5b and earnings per share (EPS) of AU$0.95 in 2023. Indeed, we can see that the analysts are a lot more bearish about Iluka Resources' prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.

See our latest analysis for Iluka Resources

It'll come as no surprise then, to learn that the analysts have cut their price target 13% to AU$9.60.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 27% by the end of 2023. This indicates a significant reduction from annual growth of 4.9% 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 2.4% annually for the foreseeable future. It's pretty clear that Iluka Resources' revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. Given the scope of the downgrades, it would not be a surprise to see the market become more wary of the business.

There might be good reason for analyst bearishness towards Iluka Resources, like concerns around earnings quality. Learn more, and discover the 1 other concern we've identified, for free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies 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.