United Company RUSAL Plc Just Missed Earnings - But Analysts Have Updated Their Models

United Company RUSAL Plc (HKG:486) missed earnings with its latest annual results, disappointing overly-optimistic forecasters. United Company RUSAL missed earnings this time around, with US$8.6b revenue coming in 4.6% below what the analysts had modelled. Statutory earnings per share (EPS) of US$0.05 also fell short of expectations by 17%. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

Check out our latest analysis for United Company RUSAL

Taking into account the latest results, the current consensus from United Company RUSAL's eleven analysts is for revenues of US$10.6b in 2021, which would reflect a huge 24% increase on its sales over the past 12 months. Per-share earnings are expected to shoot up 234% to US$0.17. Before this earnings report, the analysts had been forecasting revenues of US$10.5b and earnings per share (EPS) of US$0.16 in 2021. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

There's been no major changes to the consensus price target of US$0.75, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values United Company RUSAL at US$8.11 per share, while the most bearish prices it at US$3.46. With such a wide range in price targets, analysts are almost certainly betting on widely divergent outcomes in the underlying business. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.

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 United Company RUSAL's growth to accelerate, with the forecast 24% annualised growth to the end of 2021 ranking favourably alongside historical growth of 2.8% per annum 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 7.1% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect United Company RUSAL to grow faster than the wider industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards United Company RUSAL following these results. 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. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

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 forecasts for United Company RUSAL going out to 2024, and you can see them free on our platform here.

You should always think about risks though. Case in point, we've spotted 2 warning signs for United Company RUSAL you should be aware of, and 1 of them is potentially serious.

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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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