Royal Bafokeng Platinum Limited Earnings Missed Analyst Estimates: Here's What Analysts Are Forecasting Now

It's shaping up to be a tough period for Royal Bafokeng Platinum Limited (JSE:RBP), which a week ago released some disappointing full-year results that could have a notable impact on how the market views the stock. Results showed a clear earnings miss, with R16b revenue coming in 3.7% lower than what the analystsexpected. Statutory earnings per share (EPS) of R11.46 missed the mark badly, arriving some 34% below what was expected. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

See our latest analysis for Royal Bafokeng Platinum

After the latest results, the four analysts covering Royal Bafokeng Platinum are now predicting revenues of R17.7b in 2023. If met, this would reflect a solid 11% improvement in sales compared to the last 12 months. Per-share earnings are expected to surge 113% to R24.37. Yet prior to the latest earnings, the analysts had been anticipated revenues of R19.0b and earnings per share (EPS) of R23.67 in 2023. So it's pretty clear that while sentiment around revenues has declined following the latest results, the analysts are now more bullish on the company's earnings power.

There's been no real change to the average price target of R159, with the lower revenue and higher earnings forecasts not expected to meaningfully impact the company's valuation over a longer timeframe. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Royal Bafokeng Platinum, with the most bullish analyst valuing it at R180 and the most bearish at R128 per share. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Royal Bafokeng Platinum shareholders.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Royal Bafokeng Platinum's revenue growth is expected to slow, with the forecast 11% annualised growth rate until the end of 2023 being well below the historical 33% p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 2.1% per year. So it's pretty clear that, while Royal Bafokeng Platinum's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

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 Royal Bafokeng Platinum following these results. They also downgraded their revenue estimates, although industry data suggests that Royal Bafokeng Platinum's revenues are expected to grow faster than the wider industry. With that said, earnings are more important to the long-term value of the business. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Royal Bafokeng Platinum going out to 2025, and you can see them free on our platform here.

It is also worth noting that we have found 2 warning signs for Royal Bafokeng Platinum that you need to take into consideration.

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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.