Kumba Iron Ore Limited (JSE:KIO) Analysts Just Trimmed Their Revenue Forecasts By 14%

The analysts covering Kumba Iron Ore Limited (JSE:KIO) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.

Following the latest downgrade, the ten analysts covering Kumba Iron Ore provided consensus estimates of R61b revenue in 2025, which would reflect a disturbing 27% decline on its sales over the past 12 months. Before the latest update, the analysts were foreseeing R72b of revenue in 2025. The consensus view seems to have become more pessimistic on Kumba Iron Ore, noting the substantial drop in revenue estimates in this update.

See our latest analysis for Kumba Iron Ore

There was no particular change to the consensus price target of R374, with Kumba Iron Ore's latest outlook seemingly not enough to result in a change of valuation.

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. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 27% by the end of 2025. This indicates a significant reduction from annual growth of 4.0% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 6.6% per year. It's pretty clear that Kumba Iron Ore's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The clear low-light was that analysts slashing their revenue forecasts for Kumba Iron Ore this year. They're also anticipating slower revenue growth than the wider market. Given the stark change in sentiment, we'd understand if investors became more cautious on Kumba Iron Ore after today.

In light of the downgrade, our automated discounted cash flow valuation tool suggests that Kumba Iron Ore could now be moderately overvalued. Learn why, and examine the assumptions that underpin our valuation by visiting our free platform here to learn more about our valuation approach.

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