Shareholders in New Zealand King Salmon Investments Limited (NZSE:NZK) had a terrible week, as shares crashed 44% to NZ$0.50 in the week since its latest yearly results. Revenues were in line with expectations, at NZ$175m, while statutory losses ballooned to NZ$0.53 per share. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. 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 three analysts covering New Zealand King Salmon Investments provided consensus estimates of NZ$130.8m revenue in 2023, which would reflect a stressful 25% decline on its sales over the past 12 months. Earnings are expected to improve, with New Zealand King Salmon Investments forecast to report a statutory profit of NZ$0.014 per share. In the lead-up to this report, the analysts had been modelling revenues of NZ$177.2m and earnings per share (EPS) of NZ$0.017 in 2023. It looks like sentiment has declined substantially in the aftermath of these results, with a large cut to revenue estimates and a substantial drop in earnings per share numbers as well.
The consensus price target fell 40% to NZ$0.95, with the weaker earnings outlook clearly leading valuation estimates.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that sales are expected to reverse, with a forecast 25% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 4.2% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 8.9% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - New Zealand King Salmon Investments is expected to lag 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 New Zealand King Salmon Investments. Unfortunately, they also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for New Zealand King Salmon Investments going out to 2025, and you can see them free on our platform here.
Don't forget that there may still be risks. For instance, we've identified 3 warning signs for New Zealand King Salmon Investments (1 is a bit concerning) you should be aware of.
Valuation is complex, but we're helping make it simple.
Find out whether New Zealand King Salmon Investments is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.View the Free Analysis
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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.
New Zealand King Salmon Investments
New Zealand King Salmon Investments Limited, together with its subsidiaries, engages in the farming, processing, and sale of premium salmon products in New Zealand, North America, Australia, Japan, Europe, and internationally.
Excellent balance sheet with acceptable track record.