CA$3.79 - That's What Analysts Think Kelt Exploration Ltd. (TSE:KEL) Is Worth After These Results

It's been a good week for Kelt Exploration Ltd. (TSE:KEL) shareholders, because the company has just released its latest annual results, and the shares gained 9.2% to CA$3.10. The results look positive overall; while revenues of CA$197m were in line with analyst predictions, statutory losses were 9.4% smaller than expected, with Kelt Exploration losing CA$1.73 per share. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

Check out our latest analysis for Kelt Exploration

After the latest results, the three analysts covering Kelt Exploration are now predicting revenues of CA$215.0m in 2021. If met, this would reflect a meaningful 9.2% improvement in sales compared to the last 12 months. Per-share statutory losses are expected to explode, reaching CA$0.03 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of CA$200.0m and earnings per share (EPS) of CA$0.03 in 2021. Yet despite a small lift in revenues, the analysts are now forecasting a loss instead of a profit, which looks like a reduction in sentiment after the latest results.

The average price target rose 20% to CA$3.79, even thoughthe analysts have been updating their forecasts to show higher revenues and higher forecast losses. 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. Currently, the most bullish analyst values Kelt Exploration at CA$4.00 per share, while the most bearish prices it at CA$2.75. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

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. It's pretty clear that there is an expectation that Kelt Exploration's revenue growth will slow down substantially, with revenues to the end of 2021 expected to display 9.2% growth on an annualised basis. This is compared to a historical growth rate of 15% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 11% annually. So it's pretty clear that, while Kelt Exploration's revenue growth is expected to slow, it's expected to grow roughly in line with the industry.

The Bottom Line

The most important thing to take away is that the analysts are expecting Kelt Exploration to become unprofitable next year. There was also an upgrade to revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

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 forecasts for Kelt Exploration going out to 2024, and you can see them free on our platform here.

And what about risks? Every company has them, and we've spotted 2 warning signs for Kelt Exploration (of which 1 is a bit unpleasant!) you should know about.

If you decide to trade Kelt Exploration, use the lowest-cost* platform that is rated #1 Overall by Barron’s, Interactive Brokers. Trade stocks, options, futures, forex, bonds and funds on 135 markets, all 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.