Earnings Beat: Liontown Limited Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models
It's been a good week for Liontown Limited (ASX:LTR) shareholders, because the company has just released its latest yearly results, and the shares gained 3.9% to AU$1.19. Although revenues of AU$639m were in line with analyst expectations, Liontown surprised on the earnings front, with an unexpected (statutory) profit of AU$0.031 per share a nice improvement on the losses that the analystsforecast. 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 Liontown after the latest results.
Following the latest results, Liontown's twelve analysts are now forecasting revenues of AU$1.10b in 2027. This would be a sizeable 72% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to shoot up 193% to AU$0.085. Yet prior to the latest earnings, the analysts had been anticipated revenues of AU$1.17b and earnings per share (EPS) of AU$0.085 in 2027. The consensus seems maybe a little more pessimistic, trimming their revenue forecasts after the latest results even though there was no change to its EPS estimates.
Check out our latest analysis for Liontown
The average price target was steady at AU$1.44even though revenue estimates declined; likely suggesting the analysts place a higher value on earnings. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Liontown at AU$1.90 per share, while the most bearish prices it at AU$0.88. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
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. We can infer from the latest estimates that forecasts expect a continuation of Liontown'shistorical trends, as the 72% annualised revenue growth to the end of 2027 is roughly in line with the 86% annual growth over the past five years. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 6.2% annually. So it's pretty clear that Liontown is forecast to grow substantially faster than its industry.
The Bottom Line
The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. Even so, long term profitability is more important for the value creation process. 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 said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Liontown going out to 2029, and you can see them free on our platform here.
You can also see our analysis of Liontown's Board and CEO remuneration and experience, and whether company insiders have been buying stock.
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.