Bullish: Analysts Just Made An Incredible Upgrade To Their Golden Agri-Resources Ltd (SGX:E5H) Forecasts

Golden Agri-Resources Ltd (SGX:E5H) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's statutory forecasts. The consensus statutory numbers for both revenue and earnings per share (EPS) increased, with their view clearly much more bullish on the company's business prospects.

After the upgrade, the five analysts covering Golden Agri-Resources are now predicting revenues of US$11b in 2022. If met, this would reflect a solid 9.1% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to bounce 166% to US$0.10. Previously, the analysts had been modelling revenues of US$10b and earnings per share (EPS) of US$0.05 in 2022. There has definitely been an improvement in perception recently, with the analysts substantially increasing both their earnings and revenue estimates.

View our latest analysis for Golden Agri-Resources

Despite these upgrades, the analysts have not made any major changes to their price target of US$0.30, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. 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. There are some variant perceptions on Golden Agri-Resources, with the most bullish analyst valuing it at US$0.80 and the most bearish at US$0.30 per share. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely differing views on what kind of performance this business can generate. As a result it might not be possible to derive much meaning from the consensus price target, which is after all just an average of this wide range of 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. The analysts are definitely expecting Golden Agri-Resources' growth to accelerate, with the forecast 12% annualised growth to the end of 2022 ranking favourably alongside historical growth of 2.2% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 3.2% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Golden Agri-Resources is expected to grow much faster than its industry.

The Bottom Line

The most important thing to take away from this upgrade is that analysts upgraded their earnings per share estimates for this year, expecting improving business conditions. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. The lack of change in the price target is puzzling, but with a serious upgrade to this year's earnings expectations, it might be time to take another look at Golden Agri-Resources.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple Golden Agri-Resources analysts - going out to 2024, and you can see them free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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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.