Today is shaping up negative for Kaiser Aluminum Corporation (NASDAQ:KALU) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Revenue estimates were cut sharply as the analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.
After the downgrade, the twin analysts covering Kaiser Aluminum are now predicting revenues of US$1.3b in 2021. If met, this would reflect a meaningful 9.9% improvement in sales compared to the last 12 months. Before the latest update, the analysts were foreseeing US$1.7b of revenue in 2021. It looks like forecasts have become a fair bit less optimistic on Kaiser Aluminum, given the pretty serious reduction to revenue 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 Kaiser Aluminum's growth to accelerate, with the forecast 9.9% annualised growth to the end of 2021 ranking favourably alongside historical growth of 0.9% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 5.7% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Kaiser Aluminum is expected to grow much faster than its industry.
The Bottom Line
The most important thing to take away is that analysts cut their revenue estimates for this year. Analysts also expect revenues to grow faster than the wider market. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Kaiser Aluminum going forwards.
As you can see, the analysts clearly aren't bullish, and there might be good reason for that. We've identified some potential issues with Kaiser Aluminum's financials, such as recent substantial insider selling. Learn more, and discover the 5 other risks we've identified, for 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 downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
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