RFG Holdings Limited Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Predictions

RFG Holdings Limited (JSE:RFG) just released its latest full-year results and things are looking bullish. It was overall a positive result, with revenues beating expectations by 5.3% to hit R7.3b. RFG Holdings also reported a statutory profit of R1.37, which was an impressive 28% above what the analysts had forecast. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

Our analysis indicates that RFG is potentially undervalued!

Following the latest results, RFG Holdings' three analysts are now forecasting revenues of R8.22b in 2023. This would be a meaningful 13% improvement in sales compared to the last 12 months. Per-share earnings are expected to accumulate 9.0% to R1.50. Before this earnings report, the analysts had been forecasting revenues of R7.53b and earnings per share (EPS) of R1.28 in 2023. There's been a pretty noticeable increase in sentiment, with the analysts upgrading revenues and making a solid gain to earnings per share in particular.

Despite these upgrades,the analysts have not made any major changes to their price target of R12.39, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values RFG Holdings at R15.00 per share, while the most bearish prices it at R9.70. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

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. It's clear from the latest estimates that RFG Holdings' rate of growth is expected to accelerate meaningfully, with the forecast 13% annualised revenue growth to the end of 2023 noticeably faster than its historical growth of 7.6% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 6.5% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect RFG Holdings to grow faster than the wider industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around RFG Holdings' earnings potential next year. Happily, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for RFG Holdings going out to 2024, and you can see them free on our platform here.

Plus, you should also learn about the 2 warning signs we've spotted with RFG Holdings .

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.