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Investors in Cleanaway Waste Management Limited (ASX:CWY) had a good week, as its shares rose 5.6% to close at AU$2.66 following the release of its yearly results. Cleanaway Waste Management beat revenue expectations by 4.5%, recording sales of AU$2.4b. Statutory earnings per share (EPS) came in at AU$0.07, some 8.2% short of analyst estimates. 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.
Taking into account the latest results, the most recent consensus for Cleanaway Waste Management from eleven analysts is for revenues of AU$2.59b in 2022 which, if met, would be a reasonable 7.4% increase on its sales over the past 12 months. Statutory earnings per share are predicted to ascend 11% to AU$0.079. In the lead-up to this report, the analysts had been modelling revenues of AU$2.45b and earnings per share (EPS) of AU$0.087 in 2022. So it's pretty clear consensus is mixed on Cleanaway Waste Management after the latest results; whilethe analysts lifted revenue numbers, they also administered a small dip in per-share earnings expectations.
The analysts also upgraded Cleanaway Waste Management's price target 5.4% to AU$2.77, implying that the higher sales are expected to generate enough value to offset the forecast decline in earnings. 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 Cleanaway Waste Management, with the most bullish analyst valuing it at AU$3.30 and the most bearish at AU$2.10 per share. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
Of course, another way to look at these forecasts is to place them into context against the industry itself. It's pretty clear that there is an expectation that Cleanaway Waste Management's revenue growth will slow down substantially, with revenues to the end of 2022 expected to display 7.4% growth on an annualised basis. This is compared to a historical growth rate of 13% 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 4.7% annually. Even after the forecast slowdown in growth, it seems obvious that Cleanaway Waste Management is also expected to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Happily, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Cleanaway Waste Management going out to 2024, and you can see them free on our platform here..
We don't want to rain on the parade too much, but we did also find 1 warning sign for Cleanaway Waste Management that you need to be mindful of.
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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