Ramelius Resources Limited (ASX:RMS) Just Released Its Half-Year Earnings: Here's What Analysts Think

Last week saw the newest interim earnings release from Ramelius Resources Limited (ASX:RMS), an important milestone in the company's journey to build a stronger business. Results were roughly in line with estimates, with revenues of AU$342m and statutory earnings per share of AU$0.16. 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.

View our latest analysis for Ramelius Resources

Taking into account the latest results, the current consensus from Ramelius Resources' five analysts is for revenues of AU$662.7m in 2021, which would reflect an okay 2.8% increase on its sales over the past 12 months. Statutory earnings per share are forecast to plunge 25% to AU$0.17 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of AU$639.1m and earnings per share (EPS) of AU$0.22 in 2021. So it's pretty clear the analysts have mixed opinions on Ramelius Resources after the latest results; even though they upped their revenue numbers, it came at the cost of a pretty serious reduction to per-share earnings expectations.

There's been no major changes to the price target of AU$2.25, suggesting that the impact of higher forecast sales and lower earnings won't result in a meaningful change to the business' 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 Ramelius Resources, with the most bullish analyst valuing it at AU$2.82 and the most bearish at AU$1.75 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.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's pretty clear that there is an expectation that Ramelius Resources' revenue growth will slow down substantially, with revenues next year expected to grow 2.8%, compared to a historical growth rate of 25% over the past five years. Compare this with other companies in the same industry, which are forecast to see a revenue decline of 3.3% next year. So it's clear that despite the slowdown in growth, Ramelius Resources is still expected to grow meaningfully faster than 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, and our data indicates sales are expected to perform better than the wider industry. The consensus price target held steady at AU$2.25, with the latest estimates not enough to have an impact on their price targets.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Ramelius Resources analysts - going out to 2025, and you can see them free on our platform here.

Even so, be aware that Ramelius Resources is showing 2 warning signs in our investment analysis , you should know about...

If you’re looking to trade Ramelius Resources, open an account with the lowest-cost* platform trusted by professionals, Interactive Brokers. Their clients from over 200 countries and territories trade stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted

This article by Simply Wall St is general in nature. 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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.