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Exxaro Resources Limited (JSE:EXX) missed earnings with its latest yearly results, disappointing overly-optimistic forecasters. Exxaro Resources missed analyst forecasts, with revenues of R46b and statutory earnings per share (EPS) of R57.13, falling short by 3.4% and 6.6% respectively. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
View our latest analysis for Exxaro Resources
Taking into account the latest results, the eight analysts covering Exxaro Resources provided consensus estimates of R43.8b revenue in 2023, which would reflect a perceptible 5.6% decline on its sales over the past 12 months. Statutory earnings per share are forecast to crater 26% to R42.57 in the same period. Before this earnings report, the analysts had been forecasting revenues of R44.7b and earnings per share (EPS) of R63.17 in 2023. The analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a large cut to EPS estimates.
The consensus price target held steady at R218, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. 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. There are some variant perceptions on Exxaro Resources, with the most bullish analyst valuing it at R260 and the most bearish at R170 per share. 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.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that sales are expected to reverse, with a forecast 5.6% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 13% over the last five years. Yet aggregate analyst estimates for other companies in the industry suggest that industry revenues are forecast to decline 5.8% per year.