Warrior Met Coal, Inc. (NYSE:HCC) shareholders are probably feeling a little disappointed, since its shares fell 2.4% to US$57.71 in the week after its latest full-year results. Warrior Met Coal reported in line with analyst predictions, delivering revenues of US$1.7b and statutory earnings per share of US$9.20, suggesting the business is executing well and in line with its plan. Earnings are an important time for investors, as they can track a company’s performance, look at what the analysts are forecasting for next year, and see if there’s been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
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Earnings and Revenue Growth
Taking into account the latest results, the current consensus from Warrior Met Coal’s six analysts is for revenues of US$1.71b in 2024. This would reflect a satisfactory 2.1% increase on its revenue over the past 12 months. Statutory earnings per share are forecast to sink 14% to US$7.88 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$1.62b and earnings per share (EPS) of US$8.36 in 2024. Overall it looks as though the analysts were a bit mixed on the latest results. Although there was a a satisfactory to revenue, the consensus also made a small dip in its earnings per share forecasts.
There’s been no major changes to the price target of US$71.17, suggesting that the impact of higher forecast revenue and lower earnings won’t result in a meaningful change to the business’ valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Warrior Met Coal analyst has a price target of US$90.00 per share, while the most pessimistic values it at US$60.00. 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.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It’s pretty clear that there is an expectation that Warrior Met Coal’s revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 2.1% growth on an annualised basis. This is compared to a historical growth rate of 8.8% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 4.7% annually. Factoring in the forecast slowdown in growth, it seems obvious that Warrior Met Coal is also expected to grow slower than other industry participants.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Warrior Met Coal. Fortunately, they also upgraded their revenue estimates, although our data indicates it is expected to perform worse than the wider industry. The consensus price target held steady at US$71.17, with the latest estimates not enough to have an impact on their price targets.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year’s earnings. We have forecasts for Warrior Met Coal going out to 2026, and you can see them free on our platform here.
