Sandstorm Gold Ltd. (TSE:SSL) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's statutory forecasts. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with the analysts modelling a real improvement in business performance.
After this upgrade, Sandstorm Gold's nine analysts are now forecasting revenues of US$126m in 2021. This would be a substantial 23% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to swell 20% to US$0.18. Prior to this update, the analysts had been forecasting revenues of US$115m and earnings per share (EPS) of US$0.16 in 2021. So we can see there's been a pretty clear increase in analyst sentiment in recent times, with both revenues and earnings per share receiving a decent lift in the latest estimates.
Although the analysts have upgraded their earnings estimates, there was no change to the consensus price target of CA$13.06, suggesting that the forecast performance does not have a long term impact on the company's valuation. 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 Sandstorm Gold at CA$15.40 per share, while the most bearish prices it at CA$11.00. 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 Sandstorm Gold shareholders.
Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that Sandstorm Gold's rate of growth is expected to accelerate meaningfully, with the forecast 32% annualised revenue growth to the end of 2021 noticeably faster than its historical growth of 12% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 3.5% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Sandstorm Gold is expected to grow much faster than its industry.
The Bottom Line
The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for this year. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. The lack of change in the price target is puzzling, but with a serious upgrade to this year's earnings expectations, it might be time to take another look at Sandstorm Gold.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Sandstorm Gold analysts - going out to 2023, and you can see them free on our platform here.
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
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