It’s been a good week for Kinross Gold Corporation (TSE:K) shareholders, because the company has just released its latest annual results, and the shares gained 3.0% to CA$9.25. Revenues were US$4.2b, approximately in line with whatthe analysts expected, although statutory earnings per share (EPS) crushed expectations, coming in at US$1.06, an impressive 42% ahead of estimates. 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 gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
View our latest analysis for Kinross Gold
Taking into account the latest results, the most recent consensus for Kinross Gold from seven analysts is for revenues of US$4.56b in 2021 which, if met, would be a meaningful 8.3% increase on its sales over the past 12 months. Statutory earnings per share are expected to plummet 22% to US$0.83 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$4.70b and earnings per share (EPS) of US$0.94 in 2021. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a substantial drop in earnings per share estimates.
Despite the cuts to forecast earnings, there was no real change to the US$11.79 price target, showing that the analysts don’t think the changes have a meaningful impact on its intrinsic value. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Kinross Gold at US$20.10 per share, while the most bearish prices it at US$8.90. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
Of course, another way to look at these forecasts is to place them into context against the industry itself. The analysts are definitely expecting Kinross Gold’s growth to accelerate, with the forecast 8.3% growth ranking favourably alongside historical growth of 3.6% per annum over the past five years. Other similar companies in the industry (with analyst coverage) are also forecast to grow their revenue at 7.8% per year. Factoring in the forecast acceleration in revenue, it’s pretty clear that Kinross Gold is expected to grow at about the same rate as the wider industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Sadly, they also downgraded their sales forecasts, but the business is still expected to grow at roughly the same rate as the industry itself. The consensus price target held steady at US$11.79, with the latest estimates not enough to have an impact on their price targets.
With that said, the long-term trajectory of the company’s earnings is a lot more important than next year. We have estimates – from multiple Kinross Gold analysts – going out to 2022, and you can see them free on our platform here.
Plus, you should also learn about the 1 warning sign we’ve spotted with Kinross Gold .
If you decide to trade Kinross Gold, use the lowest-cost* platform that is rated #1 Overall by Barron’s, Interactive Brokers. Trade stocks, options, futures, forex, bonds and funds on 135 markets, all from a single integrated account.
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.
*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.