Stock Analysis

Exxaro Resources Limited Earnings Missed Analyst Estimates: Here's What Analysts Are Forecasting Now

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Exxaro Resources Limited (JSE:EXX) missed earnings with its latest yearly results, disappointing overly-optimistic forecasters. Exxaro Resources missed analyst forecasts, with revenues of R46b and statutory earnings per share (EPS) of R57.13, falling short by 3.4% and 6.6% respectively. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Exxaro Resources after the latest results.

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JSE:EXX Earnings and Revenue Growth March 19th 2023

Taking into account the latest results, the current consensus from Exxaro Resources' eight analysts is for revenues of R49.4b in 2023, which would reflect an okay 6.5% increase on its sales over the past 12 months. Statutory earnings per share are predicted to expand 10% to R63.17. In the lead-up to this report, the analysts had been modelling revenues of R48.6b and earnings per share (EPS) of R71.90 in 2023. So there's definitely been a decline in sentiment after the latest results, noting the real cut to new EPS forecasts.

The consensus price target held steady at R244, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Exxaro Resources, with the most bullish analyst valuing it at R310 and the most bearish at R180 per share. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

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. We would highlight that Exxaro Resources' revenue growth is expected to slow, with the forecast 6.5% annualised growth rate until the end of 2023 being well below the historical 13% p.a. growth over the last five years. Compare this with other companies in the same industry, which are forecast to see a revenue decline of 4.6% annually. Factoring in the forecast slowdown in growth, it's pretty clear that Exxaro Resources is still expected to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the plus side, they made no changes to their revenue estimates - and they expect sales to perform better than the wider industry. The consensus price target held steady at R244, with the latest estimates not enough to have an impact on their price targets.

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 estimates - from multiple Exxaro Resources analysts - going out to 2025, and you can see them free on our platform here.

Plus, you should also learn about the 2 warning signs we've spotted with Exxaro Resources (including 1 which is a bit unpleasant) .

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