Northam Platinum Holdings Limited (JSE:NPH) Just Reported Full-Year Earnings: Have Analysts Changed Their Mind On The Stock?

The analysts might have been a bit too bullish on Northam Platinum Holdings Limited (JSE:NPH), given that the company fell short of expectations when it released its full-year results last week. Results look to have been somewhat negative - revenue fell 3.7% short of analyst estimates at R34b, and statutory earnings of R26.15 per share missed forecasts by 3.9%. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Northam Platinum Holdings after the latest results.

See our latest analysis for Northam Platinum Holdings

Taking into account the latest results, the current consensus from Northam Platinum Holdings' seven analysts is for revenues of R44.0b in 2023, which would reflect a major 29% increase on its sales over the past 12 months. Statutory earnings per share are predicted to soar 63% to R41.02. Before this earnings report, the analysts had been forecasting revenues of R46.3b and earnings per share (EPS) of R37.76 in 2023. 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.

There's been no real change to the average price target of R225, with the lower revenue and higher earnings forecasts not expected to meaningfully impact the company's valuation over a longer timeframe. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Northam Platinum Holdings, with the most bullish analyst valuing it at R300 and the most bearish at R150 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's pretty clear that there is an expectation that Northam Platinum Holdings' revenue growth will slow down substantially, with revenues to the end of 2023 expected to display 29% growth on an annualised basis. This is compared to a historical growth rate of 37% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 1.3% annually. So it's pretty clear that, while Northam Platinum Holdings' revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Northam Platinum Holdings' earnings potential next year. They also downgraded their revenue estimates, although industry data suggests that Northam Platinum Holdings' revenues are expected to grow faster than the wider industry. Yet - earnings are more important to the intrinsic value of the business. The consensus price target held steady at R225, with the latest estimates not enough to have an impact on their price targets.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Northam Platinum Holdings going out to 2025, and you can see them free on our platform here..

Even so, be aware that Northam Platinum Holdings is showing 3 warning signs in our investment analysis , you should know about...

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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.