Analyst Forecasts Just Got A Lot More Bearish On Superior Gold Inc. (CVE:SGI)

The latest analyst coverage could presage a bad day for Superior Gold Inc. (CVE:SGI), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting analysts have soured majorly on the business.

Following the downgrade, the most recent consensus for Superior Gold from its four analysts is for revenues of US$120m in 2020 which, if met, would be a reasonable 6.5% increase on its sales over the past 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 78% to US$0.03. Previously, the analysts had been modelling revenues of US$138m and earnings per share (EPS) of US$0.07 in 2020. There looks to have been a major change in sentiment regarding Superior Gold's prospects, with a substantial drop in revenues and the analysts now forecasting a loss instead of a profit.

View our latest analysis for Superior Gold

The consensus price target fell 14% to US$1.02, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Superior Gold at US$1.85 per share, while the most bearish prices it at US$1.15. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.

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. One thing stands out from these estimates, which is that Superior Gold is forecast to grow faster in the future than it has in the past, with revenues expected to grow 6.5%. If achieved, this would be a much better result than the 4.7% annual decline over the past year. Compare this against analyst estimates for the wider industry, which suggest that (in aggregate) industry revenues are expected to grow 5.8% next year. So while Superior Gold's revenues are expected to improve, it seems that it is expected to grow at about the same rate as the overall industry.

The Bottom Line

The biggest low-light for us was that the forecasts for Superior Gold dropped from profits to a loss this year. Lamentably, they also downgraded their sales forecasts, but the business is still expected to grow at roughly the same rate as the market itself. With a serious cut to this year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of Superior Gold.

Still, 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 Superior Gold going out to 2021, 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 downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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This article by Simply Wall St is general in nature. 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.
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