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Anglo American Platinum Limited (JSE:AMS) last week reported its latest interim results, which makes it a good time for investors to dive in and see if the business is performing in line with expectations. Statutory earnings per share of R29.38 unfortunately missed expectations by 17%, although it was encouraging to see revenues of R65b exceed expectations by 6.2%. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Check out our latest analysis for Anglo American Platinum
Following the recent earnings report, the consensus from nine analysts covering Anglo American Platinum is for revenues of R130.2b in 2023. This implies a not inconsiderable 9.1% decline in revenue compared to the last 12 months. Statutory earnings per share are expected to dive 31% to R79.13 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of R137.3b and earnings per share (EPS) of R112 in 2023. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a pretty serious reduction to earnings per share estimates.
Despite the cuts to forecast earnings, there was no real change to the R1,085 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. 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 Anglo American Platinum analyst has a price target of R1,700 per share, while the most pessimistic values it at R810. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
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 revenue is expected to slow, with a forecast annualised decline of 17% by the end of 2023. This indicates a significant reduction from annual growth of 20% 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 3.9% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Anglo American Platinum is expected to lag the wider industry.