Results: Capstone Copper Corp. Beat Earnings Expectations And Analysts Now Have New Forecasts

Last week, you might have seen that Capstone Copper Corp. (TSE:CS) released its second-quarter result to the market. The early response was not positive, with shares down 3.8% to CA$8.70 in the past week. Revenues were US$393m, approximately in line with whatthe analysts expected, although statutory earnings per share (EPS) crushed expectations, coming in at US$0.04, an impressive 63% ahead of estimates. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

Check out our latest analysis for Capstone Copper

Taking into account the latest results, the most recent consensus for Capstone Copper from eleven analysts is for revenues of US$1.84b in 2024. If met, it would imply a huge 31% increase on its revenue over the past 12 months. Earnings are expected to improve, with Capstone Copper forecast to report a statutory profit of US$0.34 per share. Before this earnings report, the analysts had been forecasting revenues of US$1.88b and earnings per share (EPS) of US$0.23 in 2024. While revenue forecasts have been revised downwards, the analysts look to have become more optimistic on the company's cost base, given the sizeable expansion in to the earnings per share numbers.

There's been no real change to the average price target of CA$12.77, with the lower revenue and higher earnings forecasts not expected to meaningfully impact the company's valuation over a longer timeframe. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Capstone Copper, with the most bullish analyst valuing it at CA$14.00 and the most bearish at CA$11.50 per share. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.

Of course, another way to look at these forecasts is to place them into context against the industry itself. The analysts are definitely expecting Capstone Copper's growth to accelerate, with the forecast 70% annualised growth to the end of 2024 ranking favourably alongside historical growth of 29% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 13% 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 biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Capstone Copper's earnings potential next year. They also downgraded Capstone Copper's revenue estimates, but industry data suggests that it is expected to grow faster than the wider industry. Yet - earnings are more important to the intrinsic value of the business. The consensus price target held steady at CA$12.77, with the latest estimates not enough to have an impact on their price targets.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Capstone Copper going out to 2026, and you can see them free on our platform here.

We don't want to rain on the parade too much, but we did also find 3 warning signs for Capstone Copper that you need to be mindful of.

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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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com