Stock Analysis

ArcelorMittal South Africa Ltd Just Beat Revenue Estimates By 11%

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Investors in ArcelorMittal South Africa Ltd (JSE:ACL) had a good week, as its shares rose 5.5% to close at R6.54 following the release of its half-year results. It was a mildly positive result, with revenues exceeding expectations at R22b, while statutory earnings per share (EPS) of R2.76 were in line with analyst forecasts. Earnings are an important time for investors, as they can track a company's performance, look at what the analyst is forecasting for next year, and see if there's been a change in sentiment towards the company. We thought readers would find it interesting to see the analyst latest (statutory) post-earnings forecasts for next year.

View our latest analysis for ArcelorMittal South Africa

JSE:ACL Earnings and Revenue Growth July 31st 2022

Following last week's earnings report, ArcelorMittal South Africa's lone analyst are forecasting 2022 revenues to be R42.6b, approximately in line with the last 12 months. Statutory earnings per share are expected to descend 11% to R5.94 in the same period. Before this earnings report, the analyst had been forecasting revenues of R37.8b and earnings per share (EPS) of R4.54 in 2022. There has definitely been an improvement in perception after these results, with the analyst noticeably increasing both their earnings and revenue estimates.

With these upgrades, we're not surprised to see that the analyst has lifted their price target 7.1% to R7.50per share.

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. We would also point out that the forecast 3.4% annualised revenue decline to the end of 2022 is roughly in line with the historical trend, which saw revenues shrink 3.0% annually over the past five years By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue shrink 0.1% per year. So it's pretty clear that ArcelorMittal South Africa sales are expected to decline at a faster rate 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 ArcelorMittal South Africa's earnings potential next year. They also upgraded their revenue estimates, with sales apparently performing well, although revenues are expected to lag the wider industry this year. We note an upgrade to the price target, suggesting that the analyst believes the intrinsic value of the business is likely to improve over time.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have analyst estimates for ArcelorMittal South Africa going out as far as 2024, and you can see them free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 3 warning signs for ArcelorMittal South Africa that you should be aware of.

Valuation is complex, but we're helping make it simple.

Find out whether ArcelorMittal South Africa is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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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.