One Forecaster Is Now More Bearish On Aris Gold Corporation (TSE:ARIS) Than They Used To Be

Simply Wall St
·2 min read

One thing we could say about the covering analyst on Aris Gold Corporation (TSE:ARIS) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Revenue estimates were cut sharply as the analyst signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well. Shares are up 8.9% to CA$2.45 in the past week. We'd be curious to see if the downgrade is enough to reverse investor sentiment on the business.

After this downgrade, Aris Gold's solo analyst is now forecasting revenues of US$66m in 2021. This would be a sizeable 44% improvement in sales compared to the last 12 months. Prior to the latest estimates, the analyst was forecasting revenues of US$87m in 2021. It looks like forecasts have become a fair bit less optimistic on Aris Gold, given the pretty serious reduction to revenue estimates.

See our latest analysis for Aris Gold

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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. The analyst is definitely expecting Aris Gold's growth to accelerate, with the forecast 44% annualised growth to the end of 2021 ranking favourably alongside historical growth of 29% per annum over the past year. Compare this with other companies in the same industry, which are forecast to grow their revenue 3.4% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Aris Gold is expected to grow much faster than its industry.

The Bottom Line

The most important thing to take away is that the analyst cut their revenue estimates for this year. They're also forecasting more rapid revenue growth than the wider market. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on Aris Gold after today.

That said, this analyst might have good reason to be negative on Aris Gold, given major dilution from new stock issuance in the past year. Learn more, and discover the 1 other concern we've identified, for free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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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