Shareholders in Arch Resources, Inc. (NYSE:ARCH) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. The consensus statutory numbers for both revenue and earnings per share (EPS) increased, with their view clearly much more bullish on the company's business prospects. The market may be pricing in some blue sky too, with the share price gaining 24% to US$166 in the last 7 days. Could this upgrade be enough to drive the stock even higher?
After this upgrade, Arch Resources' five analysts are now forecasting revenues of US$3.9b in 2022. This would be a substantial 46% improvement in sales compared to the last 12 months. Per-share earnings are expected to leap 89% to US$75.27. Previously, the analysts had been modelling revenues of US$3.5b and earnings per share (EPS) of US$60.35 in 2022. There has definitely been an improvement in perception recently, with the analysts substantially increasing both their earnings and revenue estimates.
Check out our latest analysis for Arch Resources
It will come as no surprise to learn that the analysts have increased their price target for Arch Resources 11% to US$192 on the back of these upgrades. 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. There are some variant perceptions on Arch Resources, with the most bullish analyst valuing it at US$234 and the most bearish at US$160 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.
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. For example, we noticed that Arch Resources' rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 65% growth to the end of 2022 on an annualised basis. That is well above its historical decline of 5.1% a year over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 1.1% annually. Not only are Arch Resources' revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.
The Bottom Line
The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for this year. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. Given that the consensus looks almost universally bullish, with a substantial increase to forecasts and a higher price target, Arch Resources could be worth investigating further.