Ridley Corporation Limited (ASX:RIC) just released its yearly report and things are looking bullish. Results were good overall, with revenues beating analyst predictions by 3.9% to hit AU$1.0b. Statutory earnings per share (EPS) came in at AU$0.13, some 3.7% above whatthe analysts had expected. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Taking into account the latest results, the most recent consensus for Ridley from five analysts is for revenues of AU$1.09b in 2023 which, if met, would be a credible 3.8% increase on its sales over the past 12 months. Statutory earnings per share are expected to reduce 2.8% to AU$0.13 in the same period. In the lead-up to this report, the analysts had been modelling revenues of AU$1.02b and earnings per share (EPS) of AU$0.12 in 2023. It looks like there's been a modest increase in sentiment following the latest results, withthe analysts becoming a bit more optimistic in their predictions for both revenues and earnings.
With these upgrades, we're not surprised to see that the analysts have lifted their price target 6.1% to AU$2.07per share. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Ridley, with the most bullish analyst valuing it at AU$2.15 and the most bearish at AU$1.90 per share. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Ridley is an easy business to forecast or the the analysts are all using similar assumptions.
Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that Ridley's rate of growth is expected to accelerate meaningfully, with the forecast 3.8% annualised revenue growth to the end of 2023 noticeably faster than its historical growth of 2.1% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to see revenue growth of 6.9% annually. So it's clear that despite the acceleration in growth, Ridley is expected to grow meaningfully slower than the industry average.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Ridley's earnings potential next year. They also upgraded their revenue estimates for next year, even though sales are expected to grow slower than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Ridley going out to 2025, and you can see them free on our platform here.
Don't forget that there may still be risks. For instance, we've identified 1 warning sign for Ridley that you should be aware of.
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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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