Revenue Beat: JSW Steel Limited Exceeded Revenue Forecasts By 6.9% And Analysts Are Updating Their Estimates

By
Simply Wall St
Published
January 25, 2021
NSEI:JSWSTEEL

As you might know, JSW Steel Limited (NSE:JSWSTEEL) recently reported its quarterly numbers. JSW Steel beat revenue expectations by 6.9%, recording sales of ₹219b. Statutory earnings per share (EPS) came in at ₹11.09, some 4.1% short of analyst estimates. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

View our latest analysis for JSW Steel

earnings-and-revenue-growth
NSEI:JSWSTEEL Earnings and Revenue Growth January 26th 2021

Taking into account the latest results, the most recent consensus for JSW Steel from 20 analysts is for revenues of ₹909.5b in 2022 which, if met, would be a sizeable 29% increase on its sales over the past 12 months. Per-share earnings are expected to leap 117% to ₹35.59. In the lead-up to this report, the analysts had been modelling revenues of ₹896.6b and earnings per share (EPS) of ₹35.22 in 2022. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.

It will come as no surprise then, to learn that the consensus price target is largely unchanged at ₹383. 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. There are some variant perceptions on JSW Steel, with the most bullish analyst valuing it at ₹458 and the most bearish at ₹270 per share. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

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 JSW Steel's rate of growth is expected to accelerate meaningfully, with the forecast 29% revenue growth noticeably faster than its historical growth of 11%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 9.8% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect JSW Steel to grow faster than the wider industry.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Happily, there were no major changes to revenue forecasts, with the business still 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.

With that in mind, we wouldn't be too quick to come to a conclusion on JSW Steel. Long-term earnings power is much more important than next year's profits. We have forecasts for JSW Steel going out to 2024, and you can see them free on our platform here.

It is also worth noting that we have found 3 warning signs for JSW Steel that you need to take into consideration.

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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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