Shareholders might have noticed that Hochschild Mining plc (LON:HOC) filed its full-year result this time last week. The early response was not positive, with shares down 6.0% to UK£1.95 in the past week. Sales of US$622m surpassed estimates by 2.2%, although statutory earnings per share missed badly, coming in 69% below expectations at US$0.03 per share. 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.
Taking into account the latest results, the most recent consensus for Hochschild Mining from eight analysts is for revenues of US$830.8m in 2021 which, if met, would be a substantial 34% increase on its sales over the past 12 months. Statutory earnings per share are predicted to shoot up 807% to US$0.27. In the lead-up to this report, the analysts had been modelling revenues of US$836.8m and earnings per share (EPS) of US$0.28 in 2021. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a minor downgrade to their earnings per share forecasts.
The consensus price target held steady at US$3.66, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Hochschild Mining analyst has a price target of US$3.32 per share, while the most pessimistic values it at US$2.19. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. The analysts are definitely expecting Hochschild Mining's growth to accelerate, with the forecast 34% annualised growth to the end of 2021 ranking favourably alongside historical growth of 2.4% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 2.0% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Hochschild Mining to grow faster than the wider industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Hochschild Mining. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. The consensus price target held steady at US$3.66, 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. At Simply Wall St, we have a full range of analyst estimates for Hochschild Mining going out to 2023, and you can see them free on our platform here..
And what about risks? Every company has them, and we've spotted 5 warning signs for Hochschild Mining you should know about.
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