Capstone Copper Corp. Recorded A 5.4% Miss On Revenue: Analysts Are Revisiting Their Models

As you might know, Capstone Copper Corp. (TSE:CS) recently reported its third-quarter numbers. Revenues came in 5.4% below expectations, at US$309m. Statutory earnings per share were relatively better off, with a per-share profit of US$0.05 being roughly in line with analyst estimates. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Capstone Copper after the latest results.

Our analysis indicates that CS is potentially undervalued!

Taking into account the latest results, the current consensus from Capstone Copper's ten analysts is for revenues of US$1.59b in 2023, which would reflect a sizeable 38% increase on its sales over the past 12 months. Per-share earnings are expected to rise 2.2% to US$0.27. Before this earnings report, the analysts had been forecasting revenues of US$1.70b and earnings per share (EPS) of US$0.35 in 2023. The analysts seem less optimistic after the recent results, reducing their sales forecasts and making a pretty serious reduction to earnings per share numbers.

The analysts made no major changes to their price target of CA$5.75, suggesting the downgrades are not expected to have a long-term impact on Capstone Copper's valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Capstone Copper at CA$7.50 per share, while the most bearish prices it at CA$4.50. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Capstone Copper shareholders.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. The analysts are definitely expecting Capstone Copper's growth to accelerate, with the forecast 29% annualised growth to the end of 2023 ranking favourably alongside historical growth of 20% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 11% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Capstone Copper is expected to grow much faster than its 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. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster 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.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Capstone Copper going out to 2024, and you can see them free on our platform here..

Even so, be aware that Capstone Copper is showing 3 warning signs in our investment analysis , and 2 of those are significant...

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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.