Elkem ASA Beat Analyst Estimates: See What The Consensus Is Forecasting For This Year

Elkem ASA (OB:ELK) investors will be delighted, with the company turning in some strong numbers with its latest results. It was overall a positive result, with revenues beating expectations by 4.5% to hit kr8.5b. Elkem also reported a statutory profit of kr1.35, which was an impressive 538% above what the analysts had forecast. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

View our latest analysis for Elkem

Taking into account the latest results, the most recent consensus for Elkem from five analysts is for revenues of kr35.3b in 2024. If met, it would imply a decent 11% increase on its revenue over the past 12 months. Elkem is also expected to turn profitable, with statutory earnings of kr1.60 per share. In the lead-up to this report, the analysts had been modelling revenues of kr34.3b and earnings per share (EPS) of kr0.70 in 2024. So it seems there's been a definite increase in optimism about Elkem's future following the latest results, with a massive increase in the earnings per share forecasts in particular.

With these upgrades, we're not surprised to see that the analysts have lifted their price target 6.1% to kr26.00per share. 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 Elkem, with the most bullish analyst valuing it at kr30.00 and the most bearish at kr22.00 per share. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Elkem's past performance and to peers in the same industry. The analysts are definitely expecting Elkem's growth to accelerate, with the forecast 24% annualised growth to the end of 2024 ranking favourably alongside historical growth of 13% 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 3.9% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Elkem 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 Elkem following these results. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

With that in mind, we wouldn't be too quick to come to a conclusion on Elkem. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Elkem analysts - going out to 2026, and you can see them free on our platform here.

You can also see whether Elkem is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.

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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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com