Solvar Limited (ASX:SVR) Just Released Its Half-Yearly Earnings: Here's What Analysts Think

It's been a mediocre week for Solvar Limited (ASX:SVR) shareholders, with the stock dropping 11% to AU$1.07 in the week since its latest half-yearly results. It was a workmanlike result, with revenues of AU$110m coming in 2.1% ahead of expectations, and statutory earnings per share of AU$0.063, in line with analyst appraisals. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

See our latest analysis for Solvar

Taking into account the latest results, the consensus forecast from Solvar's dual analysts is for revenues of AU$220.4m in 2024. This reflects a credible 2.3% improvement in revenue compared to the last 12 months. Statutory per share are forecast to be AU$0.17, approximately in line with the last 12 months. Yet prior to the latest earnings, the analysts had been anticipated revenues of AU$220.1m and earnings per share (EPS) of AU$0.15 in 2024. There was no real change to the revenue estimates, but the analysts do seem more bullish on earnings, given the nice increase in earnings per share expectations following these results.

There's been no major changes to the consensus price target of AU$1.31, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Solvar's past performance and to peers in the same industry. We would highlight that Solvar's revenue growth is expected to slow, with the forecast 4.6% annualised growth rate until the end of 2024 being well below the historical 20% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 13% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Solvar.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Solvar following these results. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. 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 in mind, we wouldn't be too quick to come to a conclusion on Solvar. Long-term earnings power is much more important than next year's profits. At least one analyst has provided forecasts out to 2026, which can be seen for free on our platform here.

It is also worth noting that we have found 3 warning signs for Solvar (1 is a bit concerning!) that you need to take into consideration.

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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.