New Forecasts: Here's What Analysts Think The Future Holds For ArcelorMittal South Africa Ltd (JSE:ACL)

ArcelorMittal South Africa Ltd (JSE:ACL) shareholders will have a reason to smile today, with the covering analyst making substantial upgrades to this year's statutory forecasts. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with the analyst modelling a real improvement in business performance. Investors have been pretty optimistic on ArcelorMittal South Africa too, with the stock up 36% to R7.12 over the past week. It will be interesting to see if today's upgrade is enough to propel the stock even higher.

Following the upgrade, the current consensus from ArcelorMittal South Africa's lone analyst is for revenues of R62b in 2021 which - if met - would reflect a huge 151% increase on its sales over the past 12 months. Losses are expected to turn into profits real soon, with the analyst forecasting R4.52 in per-share earnings. Prior to this update, the analyst had been forecasting revenues of R51b and earnings per share (EPS) of R3.80 in 2021. So we can see there's been a pretty clear increase in analyst sentiment in recent times, with both revenues and earnings per share receiving a decent lift in the latest estimates.

Check out our latest analysis for ArcelorMittal South Africa

With these upgrades, we're not surprised to see that the analyst has lifted their price target 5.9% to R9.00 per share.

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. It's clear from the latest estimates that ArcelorMittal South Africa's rate of growth is expected to accelerate meaningfully, with the forecast 151% annualised revenue growth to the end of 2021 noticeably faster than its historical growth of 1.1% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue shrink 1.6% per year. So it's clear with the acceleration in growth, ArcelorMittal South Africa is expected to grow meaningfully faster than the wider industry.

The Bottom Line

The most important thing to take away from this upgrade is that the analyst upgraded their earnings per share estimates for this year, expecting improving business conditions. On the plus side, they also lifted their revenue estimates, and the company is expected to perform better than the wider market. Given that the consensus looks almost universally bullish, with a substantial increase to forecasts and a higher price target, ArcelorMittal South Africa could be worth investigating further.

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 2023, and you can see them free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

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This article by Simply Wall St is general in nature. 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.
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