Gold Fields Limited Beat Analyst Estimates: See What The Consensus Is Forecasting For This Year

Gold Fields Limited (JSE:GFI) shareholders are probably feeling a little disappointed, since its shares fell 8.4% to R126 in the week after its latest annual results. The result was positive overall - although revenues of US$3.9b were in line with what the analysts predicted, Gold Fields surprised by delivering a statutory profit of US$0.81 per share, modestly greater than expected. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

View our latest analysis for Gold Fields

After the latest results, the nine analysts covering Gold Fields are now predicting revenues of US$4.34b in 2021. If met, this would reflect a meaningful 11% improvement in sales compared to the last 12 months. Per-share earnings are expected to leap 90% to US$1.56. Before this earnings report, the analysts had been forecasting revenues of US$4.59b and earnings per share (EPS) of US$1.50 in 2021. If anything, the analysts look to have become slightly more optimistic overall; while they decreased their revenue forecasts, EPS predictions increased and ultimately earnings are more important.

The consensus price target fell 5.2% to R191, with the analysts signalling that the weaker revenue outlook was a more powerful indicator than the upgraded EPS forecasts. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Gold Fields, with the most bullish analyst valuing it at R267 and the most bearish at R160 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Gold Fields' past performance and to peers in the same industry. It's clear from the latest estimates that Gold Fields' rate of growth is expected to accelerate meaningfully, with the forecast 11% revenue growth noticeably faster than its historical growth of 6.6%p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 11% next year. Factoring in the forecast acceleration in revenue, it's pretty clear that Gold Fields is expected to grow at about the same rate as the wider industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Gold Fields following these results. They also downgraded their revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Gold Fields' future valuation.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Gold Fields going out to 2023, and you can see them free on our platform here.

You should always think about risks though. Case in point, we've spotted 2 warning signs for Gold Fields you should be aware of.

If you decide to trade Gold Fields, use the lowest-cost* platform that is rated #1 Overall by Barron’s, Interactive Brokers. Trade stocks, options, futures, forex, bonds and funds on 135 markets, all from a single integrated account. Promoted

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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

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