The latest analyst coverage could presage a bad day for Americas Gold and Silver Corporation (TSE:USA), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting analysts have soured majorly on the business.

Following the downgrade, the most recent consensus for Americas Gold and Silver from its six analysts is for revenues of US$58m in 2021 which, if met, would be a substantial 61% increase on its sales over the past 12 months. Losses are presumed to reduce, shrinking 16% from last year to US$0.84. However, before this estimates update, the consensus had been expecting revenues of US$87m and US$0.69 per share in losses. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a serious cut to their revenue forecasts while also expecting losses per share to increase.

See our latest analysis for Americas Gold and Silver

The consensus price target fell 29% to CA$1.90, implicitly signalling that lower earnings per share are a leading indicator for Americas Gold and Silver'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. The most optimistic Americas Gold and Silver analyst has a price target of CA$2.75 per share, while the most pessimistic values it at CA$1.15. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.

Of course, another way to look at these forecasts is to place them into context against the industry itself. One thing stands out from these estimates, which is that Americas Gold and Silver is forecast to grow faster in the future than it has in the past, with revenues expected to display 161% annualised growth until the end of 2021. If achieved, this would be a much better result than the 9.6% annual decline over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 3.5% per year. So it looks like Americas Gold and Silver is expected to grow faster than its competitors, at least for a while.

The Bottom Line

The most important thing to take away is that analysts increased their loss per share estimates for this year. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of Americas Gold and Silver.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates – from multiple Americas Gold and Silver analysts – going out to 2023, and you can see them free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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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