Yahoo Finance Earnings Update: Ero Copper Corp. (TSE:ERO) Just Reported Its Second-Quarter Results And Analysts Are Updating Their Forecasts
Last week, you might have seen that Ero Copper Corp. (TSE:ERO) released its second-quarter result to the market. The early response was not positive, with shares down 4.3% to CA$11.12 in the past week. Results look mixed - while revenue fell marginally short of analyst estimates at US$115m, statutory earnings were in line with expectations, at US$2.25 per share. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
See our latest analysis for Ero Copper
Taking into account the latest results, the current consensus, from the nine analysts covering Ero Copper, is for revenues of US$452.8m in 2022, which would reflect a measurable 3.8% reduction in Ero Copper's sales over the past 12 months. Statutory earnings per share are expected to descend 14% to US$1.53 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$442.9m and earnings per share (EPS) of US$1.92 in 2022. So it's pretty clear the analysts have mixed opinions on Ero Copper after the latest results; even though they upped their revenue numbers, it came at the cost of a pretty serious reduction to per-share earnings expectations.
There's been no major changes to the price target of CA$19.64, suggesting that the impact of higher forecast sales and lower earnings won't result in a meaningful change to the business' valuation. 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. The most optimistic Ero Copper analyst has a price target of CA$27.00 per share, while the most pessimistic values it at CA$16.00. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
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. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 7.4% by the end of 2022. This indicates a significant reduction from annual growth of 25% 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 12% per year. It's pretty clear that Ero Copper's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Ero Copper. Fortunately, they also upgraded their revenue estimates, although our data indicates sales are expected to perform worse than the wider industry. The consensus price target held steady at CA$19.64, 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 estimates - from multiple Ero Copper analysts - going out to 2024, and you can see them free on our platform here.
You should always think about risks though. Case in point, we've spotted 3 warning signs for Ero Copper you should be aware of, and 1 of them doesn't sit too well with us.
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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