Equinox Gold Corp. Beat Analyst Profit Forecasts, And Analysts Have New Estimates

Equinox Gold Corp. (TSE:EQX) last week reported its latest second-quarter results, which makes it a good time for investors to dive in and see if the business is performing in line with expectations. Revenues of US$272m reported a marginal miss, falling short of forecasts by 5.7%, but earnings were better than expected - statutory profits came in at US$0.02 per share, a nice change from the loss the analysts expected. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

See our latest analysis for Equinox Gold

Taking into account the latest results, the consensus forecast from Equinox Gold's seven analysts is for revenues of US$1.14b in 2023. This reflects a solid 13% improvement in revenue compared to the last 12 months. Earnings are expected to tip over into lossmaking territory, with the analysts forecasting statutory losses of -US$0.045 per share in 2023. Before this earnings announcement, the analysts had been modelling revenues of US$1.25b and losses of US$0.042 per share in 2023. So it's pretty clear consensus is more negative on Equinox Gold after the new consensus numbers; while the analysts trimmed their revenue estimates, they also administered a moderate increase in per-share loss expectations.

The average price target was broadly unchanged at CA$8.09, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the 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 Equinox Gold at CA$9.53 per share, while the most bearish prices it at CA$5.09. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's pretty clear that there is an expectation that Equinox Gold's revenue growth will slow down substantially, with revenues to the end of 2023 expected to display 28% growth on an annualised basis. This is compared to a historical growth rate of 41% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 14% annually. Even after the forecast slowdown in growth, it seems obvious that Equinox Gold is also expected to grow faster than the wider industry.

The Bottom Line

The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Equinox Gold. They also downgraded Equinox Gold's revenue estimates, but industry data suggests that it is expected to grow faster than the wider industry. The consensus price target held steady at CA$8.09, with the latest estimates not enough to have an impact on their price targets.

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 Equinox Gold going out to 2025, 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 2 warning signs for Equinox Gold 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.