What You Need To Know About The ROK Resources Inc. (CVE:ROK) Analyst Downgrade Today

The latest analyst coverage could presage a bad day for ROK Resources Inc. (CVE:ROK), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.

After the downgrade, the twin analysts covering ROK Resources are now predicting revenues of CA$101m in 2023. If met, this would reflect a sizeable 20% improvement in sales compared to the last 12 months. Before the latest update, the analysts were foreseeing CA$114m of revenue in 2023. The consensus view seems to have become more pessimistic on ROK Resources, noting the substantial drop in revenue estimates in this update.

See our latest analysis for ROK Resources

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 ROK Resources' revenue growth is expected to slow, with the forecast 20% annualised growth rate until the end of 2023 being well below the historical 98% p.a. growth over the last five years. Compare this with other companies in the same industry, which are forecast to see a revenue decline of 0.7% annually. So it's clear that despite the slowdown in growth, ROK Resources is still expected to grow meaningfully faster than the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their revenue estimates for this year. They're also forecasting for revenues to perform better than companies in the wider market. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on ROK Resources after today.

As you can see, the analysts clearly aren't bullish, and there might be good reason for that. We've identified some potential issues with ROK Resources' financials, such as concerns around earnings quality. For more information, you can click here to discover this and the 2 other risks we've identified.

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.