Investors in Tronox Holdings plc (NYSE:TROX) had a good week, as its shares rose 5.8% to close at US$15.00 following the release of its yearly results. It was a pretty bad result overall; while revenues were in line with expectations at US$2.9b, statutory losses exploded to US$0.36 per share. 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 gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Taking into account the latest results, the consensus forecast from Tronox Holdings' six analysts is for revenues of US$3.09b in 2024. This reflects a solid 8.5% improvement in revenue compared to the last 12 months. Earnings are expected to improve, with Tronox Holdings forecast to report a statutory profit of US$0.35 per share. Before this earnings report, the analysts had been forecasting revenues of US$3.04b and earnings per share (EPS) of US$0.65 in 2024. So there's definitely been a decline in sentiment after the latest results, noting the large cut to new EPS forecasts.
Despite cutting their earnings forecasts,the analysts have lifted their price target 8.1% to US$16.63, suggesting that these impacts are not expected to weigh on the stock's value in the long term. 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. Currently, the most bullish analyst values Tronox Holdings at US$19.00 per share, while the most bearish prices it at US$14.00. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Tronox Holdings' past performance and to peers in the same industry. We can infer from the latest estimates that forecasts expect a continuation of Tronox Holdings'historical trends, as the 8.5% annualised revenue growth to the end of 2024 is roughly in line with the 9.0% annual growth over the past five years. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 4.4% annually. So it's pretty clear that Tronox Holdings is forecast to grow substantially faster than its industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster 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.
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. At Simply Wall St, we have a full range of analyst estimates for Tronox Holdings going out to 2026, and you can see them free on our platform here..
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 2 warning signs with Tronox Holdings , and understanding these should be part of your investment process.
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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.