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Bega Cheese Limited Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Predictions

Bega Cheese Limited (ASX:BGA) last week reported its latest half-year results, which makes it a good time for investors to dive in and see if the business is performing in line with expectations. The result was positive overall - although revenues of AU$1.7b were in line with what the analysts predicted, Bega Cheese surprised by delivering a statutory profit of AU$0.024 per share, modestly greater than 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Bega Cheese after the latest results.

See our latest analysis for Bega Cheese

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After the latest results, the eleven analysts covering Bega Cheese are now predicting revenues of AU$3.34b in 2023. If met, this would reflect a modest 5.2% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to jump 663% to AU$0.088. In the lead-up to this report, the analysts had been modelling revenues of AU$3.13b and earnings per share (EPS) of AU$0.14 in 2023. While next year's revenue estimates increased, there was also a large cut to EPS expectations, suggesting the consensus has a bit of a mixed view of these results.

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There's been no major changes to the price target of AU$3.98, suggesting that the impact of higher forecast sales and lower earnings won't result in a meaningful change to the business' valuation. 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 Bega Cheese, with the most bullish analyst valuing it at AU$5.20 and the most bearish at AU$3.15 per share. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Bega Cheese's past performance and to peers in the same industry. We would highlight that Bega Cheese's revenue growth is expected to slow, with the forecast 11% annualised growth rate until the end of 2023 being well below the historical 22% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 4.8% annually. So it's pretty clear that, while Bega Cheese's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Bega Cheese. Happily, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider industry. The consensus price target held steady at AU$3.98, with the latest estimates not enough to have an impact on their price targets.

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 Bega Cheese going out to 2025, and you can see them free on our platform here.

You still need to take note of risks, for example - Bega Cheese has 3 warning signs we think you should be aware of.

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

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.

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