As you might know, Endeavour Mining plc (TSE:EDV) just kicked off its latest second-quarter results with some very strong numbers. The company beat both earnings and revenue forecasts, with revenue of US$628m, some 6.1% above estimates, and statutory earnings per share (EPS) coming in at US$0.76, 120% ahead of expectations. 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.
After the latest results, the consensus from Endeavour Mining's 13 analysts is for revenues of US$2.52b in 2022, which would reflect a considerable 9.3% decline in sales compared to the last year of performance. Per-share earnings are expected to leap 152% to US$1.44. Before this earnings report, the analysts had been forecasting revenues of US$2.50b and earnings per share (EPS) of US$0.96 in 2022. Although the revenue estimates have not really changed, we can see there's been a sizeable expansion in earnings per share expectations, suggesting that the analysts have become more bullish after the latest result.
There's been no major changes to the consensus price target of CA$41.63, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's 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. Currently, the most bullish analyst values Endeavour Mining at CA$47.50 per share, while the most bearish prices it at CA$34.75. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that sales are expected to reverse, with a forecast 18% annualised revenue decline to the end of 2022. That is a notable change from historical growth of 40% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 12% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Endeavour Mining is expected to lag the wider industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Endeavour Mining's earnings potential next year. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Endeavour Mining's revenues are expected to perform worse than the wider industry. The consensus price target held steady at CA$41.63, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn't be too quick to come to a conclusion on Endeavour Mining. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Endeavour Mining going out to 2024, and you can see them free on our platform here..
Even so, be aware that Endeavour Mining 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.
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