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Barloworld Limited (JSE:BAW) shareholders are probably feeling a little disappointed, since its shares fell 3.4% to R74.50 in the week after its latest full-year results. The results were positive, with revenue coming in at R45b, beating analyst expectations by 8.3%. 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. 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 Barloworld
Taking into account the latest results, the current consensus, from the five analysts covering Barloworld, is for revenues of R40.0b in 2023. This implies a definite 11% reduction in Barloworld's revenue over the past 12 months. Statutory earnings per share are forecast to reduce 7.6% to R9.64 in the same period. In the lead-up to this report, the analysts had been modelling revenues of R41.5b and earnings per share (EPS) of R10.70 in 2023. The analysts are less bullish than they were before these results, given the reduced revenue forecasts and the small dip in earnings per share expectations.
The analysts made no major changes to their price target of R93.20, suggesting the downgrades are not expected to have a long-term impact on Barloworld's valuation. 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 Barloworld, with the most bullish analyst valuing it at R106 and the most bearish at R72.00 per share. 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.
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. Over the past five years, revenues have declined around 11% annually. Worse, forecasts are essentially predicting the decline to accelerate, with the estimate for an annualised 100% decline in revenue until the end of 2023. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 4.0% per year. So while a broad number of companies are forecast to grow, unfortunately Barloworld is expected to see its revenue affected worse than other companies in the industry.