Hochschild Mining plc (LON:HOC) shareholders are probably feeling a little disappointed, since its shares fell 6.0% to UK£1.95 in the week after its latest annual results. Results overall were not great, with earnings of US$0.03 per share falling drastically short of analyst expectations. Meanwhile revenues hit US$622m and were slightly better than forecasts. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Hochschild Mining after the latest results.
After the latest results, the eight analysts covering Hochschild Mining are now predicting revenues of US$830.8m in 2021. If met, this would reflect a major 34% improvement in sales compared to the last 12 months. Per-share earnings are expected to surge 807% to US$0.27. Before this earnings report, the analysts had been forecasting revenues of US$836.8m and earnings per share (EPS) of US$0.28 in 2021. So it looks like there's been a small decline in overall sentiment after the recent results – there's been no major change to revenue estimates, but the analysts did make a small dip in their earnings per share forecasts.
It might be a surprise to learn that the consensus price target was broadly unchanged at US$3.66, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. 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. Currently, the most bullish analyst values Hochschild Mining at US$3.32 per share, while the most bearish prices it at US$2.19. 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. The analysts are definitely expecting Hochschild Mining's growth to accelerate, with the forecast 34% annualised growth to the end of 2021 ranking favourably alongside historical growth of 2.4% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 2.0% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Hochschild Mining to grow faster 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 Hochschild Mining. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations – and our data suggests that revenues are expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Hochschild Mining going out to 2023, 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 5 warning signs for Hochschild Mining that you need to be mindful of.
This article by Simply Wall St is general in nature. 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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