Last week, you might have seen that Capricorn Metals Ltd (ASX:CMM) released its half-year result to the market. The early response was not positive, with shares down 2.1% to AU$3.79 in the past week. It was a credible result overall, with revenues of AU$145m and statutory earnings per share of AU$0.11 both in line with analyst estimates, showing that Capricorn Metals is executing in line with expectations. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Capricorn Metals after the latest results.

Check out our latest analysis for Capricorn Metals  earnings-and-revenue-growth

Taking into account the latest results, Capricorn Metals' four analysts currently expect revenues in 2023 to be AU$303.8m, approximately in line with the last 12 months. Per-share earnings are expected to increase 2.3% to AU$0.21. Before this earnings report, the analysts had been forecasting revenues of AU$305.8m and earnings per share (EPS) of AU$0.23 in 2023. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.

The consensus price target held steady at AU$4.58, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Capricorn Metals analyst has a price target of AU$4.75 per share, while the most pessimistic values it at AU$4.20. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.



Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that sales are expected to reverse, with a forecast 1.9% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 89% 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 0.4% per year. It's pretty clear that Capricorn Metals' revenues are expected to perform substantially worse than 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. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that in mind, we wouldn't be too quick to come to a conclusion on Capricorn Metals. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Capricorn Metals analysts - going out to 2025, and you can see them free on our platform here.

You should always think about risks though. Case in point, we've spotted  1 warning sign for Capricorn Metals you should be aware of.

Have feedback on this article? Concerned about the content?Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.

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