Forecast: Analysts Think Warrior Met Coal, Inc.'s (NYSE:HCC) Business Prospects Have Improved Drastically

Celebrations may be in order for Warrior Met Coal, Inc. (NYSE:HCC) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. 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.

Following the upgrade, the current consensus from Warrior Met Coal's five analysts is for revenues of US$1.8b in 2022 which - if met - would reflect a substantial 44% increase on its sales over the past 12 months. Statutory earnings per share are presumed to shoot up 103% to US$12.51. Before this latest update, the analysts had been forecasting revenues of US$1.5b and earnings per share (EPS) of US$10.33 in 2022. There has definitely been an improvement in perception recently, with the analysts substantially increasing both their earnings and revenue estimates.

Check out our latest analysis for Warrior Met Coal

Although the analysts have upgraded their earnings estimates, there was no change to the consensus price target of US$39.33, suggesting that the forecast performance does not have a long term impact on the company's valuation. 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 Warrior Met Coal, with the most bullish analyst valuing it at US$50.00 and the most bearish at US$32.00 per share. This shows there is still some 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.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. One thing stands out from these estimates, which is that Warrior Met Coal is forecast to grow faster in the future than it has in the past, with revenues expected to display 62% annualised growth until the end of 2022. If achieved, this would be a much better result than the 2.4% annual decline over the past five years. What's also interesting is that our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue decline 2.7% annually for the foreseeable future. So although Warrior Met Coal is expected to return to growth, it's also expected to grow revenues during a time when the wider industry is estimated to see revenue decline.

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. Fortunately, they also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. Some investors might be disappointed to see that the price target is unchanged, but we feel that improving fundamentals are usually a positive - assuming these forecasts are met! So Warrior Met Coal could be a good candidate for more research.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Warrior Met Coal 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.