Earnings Update: Resolute Mining Limited (ASX:RSG) Just Reported Its Annual Results And Analysts Are Updating Their Forecasts

Last week, you might have seen that Resolute Mining Limited (ASX:RSG) released its annual result to the market. The early response was not positive, with shares down 4.2% to AU$0.23 in the past week. It looks like a positive result overall, with revenues of US$651m beating forecasts by 4.5%. Statutory losses of US$0.028 per share were roughly in line with what the analysts had forecast. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

View our latest analysis for Resolute Mining

After the latest results, the consensus from Resolute Mining's five analysts is for revenues of US$632.0m in 2023, which would reflect a perceptible 2.9% decline in sales compared to the last year of performance. Resolute Mining is also expected to turn profitable, with statutory earnings of US$0.01 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$611.1m and earnings per share (EPS) of US$0.011 in 2023. Overall it looks as though the analysts were a bit mixed on the latest results. Although there was a to revenue, the consensus also made a small dip in its earnings per share forecasts.

There's been no major changes to the price target of AU$0.56, suggesting that the impact of higher forecast sales and lower earnings won't result in a meaningful change to the business' valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Resolute Mining analyst has a price target of AU$0.99 per share, while the most pessimistic values it at AU$0.33. We would probably assign less value to the analyst forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

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. We would highlight that sales are expected to reverse, with a forecast 2.9% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 13% 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 0.08% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Resolute Mining 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. They also upgraded their revenue estimates for next year, even though sales are expected to grow slower 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.

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 Resolute Mining going out to 2025, and you can see them free on our platform here..

It is also worth noting that we have found 1 warning sign for Resolute Mining 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.