5N Plus Inc. Just Missed EPS By 25%: Here's What Analysts Think Will Happen Next

Investors in 5N Plus Inc. (TSE:VNP) had a good week, as its shares rose 9.0% to close at CA$5.08 following the release of its quarterly results. Statutory earnings per share fell badly short of expectations, coming in at US$0.03, some 25% below analyst forecasts, although revenues were okay, approximately in line with analyst estimates at US$65m. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

View our latest analysis for 5N Plus

Following the latest results, 5N Plus' four analysts are now forecasting revenues of US$277.5m in 2024. This would be a meaningful 10% improvement in revenue compared to the last 12 months. Statutory earnings per share are expected to shrink 2.9% to US$0.18 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$278.3m and earnings per share (EPS) of US$0.21 in 2024. The analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a substantial drop in EPS estimates.

Althoughthe analysts have revised their earnings forecasts for next year, they've also lifted the consensus price target 10% to CA$6.58, suggesting the revised estimates are not indicative of a weaker long-term future for the business. 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 5N Plus at CA$7.02 per share, while the most bearish prices it at CA$6.27. 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. It's clear from the latest estimates that 5N Plus' rate of growth is expected to accelerate meaningfully, with the forecast 14% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 6.9% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 2.5% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect 5N Plus to grow faster than the wider 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. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple 5N Plus analysts - going out to 2026, and you can see them free on our platform here.

Even so, be aware that 5N Plus is showing 2 warning signs in our investment analysis , and 1 of those is 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.