Shareholders of Sandfire Resources Limited (ASX:SFR) will be pleased this week, given that the stock price is up 18% to AU$6.10 following its latest half-yearly results. Results overall were respectable, with statutory earnings of AU$0.43 per share roughly in line with what the analysts had forecast. Revenues of AU$356m came in 2.7% ahead of analyst predictions. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

View our latest analysis for Sandfire Resources

Taking into account the latest results, the most recent consensus for Sandfire Resources from twelve analysts is for revenues of AU$754.1m in 2021 which, if met, would be a satisfactory 8.0% increase on its sales over the past 12 months. Per-share earnings are expected to surge 53% to AU$0.86. In the lead-up to this report, the analysts had been modelling revenues of AU$717.3m and earnings per share (EPS) of AU$0.76 in 2021. There's been a pretty noticeable increase in sentiment, with the analysts upgrading revenues and making a substantial gain in earnings per share in particular.

With these upgrades, we're not surprised to see that the analysts have lifted their price target 7.0% to AU$6.26per share. 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 Sandfire Resources at AU$8.00 per share, while the most bearish prices it at AU$4.60. 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.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We can infer from the latest estimates that forecasts expect a continuation of Sandfire Resources'historical trends, as next year's 8.0% revenue growth is roughly in line with 6.7% annual revenue growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue shrink 3.3% next year. So not only is Sandfire Resources expected to maintain its revenue growth despite the wider downturn, it's also forecast to grow faster than the industry as a whole.

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 Sandfire Resources following these results. On the plus side, they also lifted their revenue estimates, and the company is expected to perform better than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

With that in mind, we wouldn't be too quick to come to a conclusion on Sandfire Resources. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Sandfire Resources analysts - going out to 2023, and you can see them free on our platform here.

You should always think about risks though. Case in point, we've spotted 3 warning signs for Sandfire Resources you should be aware of, and 1 of them makes us a bit uncomfortable.

This article by Simply Wall St is general in nature. 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.

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