Shareholders in Ramaco Resources, Inc. (NASDAQ:METC) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. The consensus statutory numbers for both revenue and earnings per share (EPS) increased, with their view clearly much more bullish on the company’s business prospects.
After this upgrade, Ramaco Resources’ four analysts are now forecasting revenues of US$582m in 2022. This would be a sizeable 105% improvement in sales compared to the last 12 months. Per-share earnings are expected to shoot up 445% to US$4.91. Prior to this update, the analysts had been forecasting revenues of US$523m and earnings per share (EPS) of US$4.42 in 2022. There has definitely been an improvement in perception recently, with the analysts substantially increasing both their earnings and revenue estimates.
With these upgrades, we’re not surprised to see that the analysts have lifted their price target 9.7% to US$15.85 per share. 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 Ramaco Resources analyst has a price target of US$22.00 per share, while the most pessimistic values it at US$5.25. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how think this business will perform. As a result it might not be possible to derive much meaning from the consensus price target, which is after all just an average of this wide range of estimates.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It’s clear from the latest estimates that Ramaco Resources’ rate of growth is expected to accelerate meaningfully, with the forecast 105% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 26% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 3.0% annually. Factoring in the forecast acceleration in revenue, it’s pretty clear that Ramaco Resources is expected to grow much faster than its industry.
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. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. With a serious upgrade to expectations and a rising price target, it might be time to take another look at Ramaco Resources.
Analysts are definitely bullish on Ramaco Resources, but no company is perfect. Indeed, you should know that there are several potential concerns to be aware of, including dilutive stock issuance over the past year. For more information, you can click through to our platform to learn more about this and the 2 other flags we’ve identified .
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
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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.