These Analysts Think Sierra Rutile Holdings Limited's (ASX:SRX) Sales Are Under Threat

One thing we could say about the analysts on Sierra Rutile Holdings Limited (ASX:SRX) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.

Following the latest downgrade, the dual analysts covering Sierra Rutile Holdings provided consensus estimates of US$185m revenue in 2023, which would reflect a sizeable 23% decline on its sales over the past 12 months. Statutory earnings per share are supposed to crater 38% to US$0.031 in the same period. Previously, the analysts had been modelling revenues of US$222m and earnings per share (EPS) of US$0.031 in 2023. Indeed we can see that the consensus opinion has undergone some fundamental changes following the recent consensus updates, with a substantial drop in revenues and some minor tweaks to earnings numbers.

See our latest analysis for Sierra Rutile Holdings

The consensus has reconfirmed its price target of US$0.41, showing that the analysts don't expect weaker sales expectationsthis year to have a material impact on Sierra Rutile Holdings' market value. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Sierra Rutile Holdings, with the most bullish analyst valuing it at US$0.50 and the most bearish at US$0.32 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Sierra Rutile Holdings' past performance and to peers in the same industry. We would highlight that sales are expected to reverse, with a forecast 23% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 9.5% over the last year. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 3.2% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Sierra Rutile Holdings is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Sierra Rutile Holdings going forwards.

So things certainly aren't looking great, and you should also know that we've spotted some potential warning signs with Sierra Rutile Holdings, including its declining profit margins. Learn more, and discover the 2 other flags we've identified, for free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks 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.