Party Time: Brokers Just Made Major Increases To Their Whitehaven Coal Limited (ASX:WHC) Earnings Forecasts
Shareholders in Whitehaven Coal Limited (ASX:WHC) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. The analysts greatly increased their revenue estimates, suggesting a stark improvement in business fundamentals. The stock price has risen 10.0% to AU$6.17 over the past week, suggesting investors are becoming more optimistic. Could this big upgrade push the stock even higher?
After the upgrade, the twelve analysts covering Whitehaven Coal are now predicting revenues of AU$4.8b in 2022. If met, this would reflect a substantial 106% improvement in sales compared to the last 12 months. The losses are expected to disappear over the next year or so, with forecasts for a profit of AU$1.91 per share this year. Prior to this update, the analysts had been forecasting revenues of AU$4.2b and earnings per share (EPS) of AU$1.59 in 2022. There has definitely been an improvement in perception recently, with the analysts substantially increasing both their earnings and revenue estimates.
View our latest analysis for Whitehaven Coal
With these upgrades, we're not surprised to see that the analysts have lifted their price target 11% to AU$6.80 per share. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Whitehaven Coal, with the most bullish analyst valuing it at AU$8.50 and the most bearish at AU$4.90 per share. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Whitehaven Coal shareholders.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. One thing stands out from these estimates, which is that Whitehaven Coal is forecast to grow faster in the future than it has in the past, with revenues expected to display 3x annualised growth until the end of 2022. If achieved, this would be a much better result than the 0.7% annual decline over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 13% per year. So it looks like Whitehaven Coal is expected to grow faster than its competitors, at least for a while.
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. With a serious upgrade to expectations and a rising price target, it might be time to take another look at Whitehaven Coal.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for Whitehaven Coal going out to 2025, and you can see them free on our platform here..
Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.
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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