Celebrations may be in order for ICL Group Ltd (TLV:ICL) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with analysts modelling a real improvement in business performance. ICL Group has also found favour with investors, with the stock up a remarkable 11% to ₪40.00 over the past week. Could this upgrade be enough to drive the stock even higher?
Following the upgrade, the current consensus from ICL Group’s seven analysts is for revenues of US$10b in 2022 which – if met – would reflect a substantial 29% increase on its sales over the past 12 months. Statutory earnings per share are presumed to surge 88% to US$1.87. Before this latest update, the analysts had been forecasting revenues of US$9.1b and earnings per share (EPS) of US$1.14 in 2022. So we can see there’s been a pretty clear increase in analyst sentiment in recent times, with both revenues and earnings per share receiving a decent lift in the latest estimates.
Although the analysts have upgraded their earnings estimates, there was no change to the consensus price target of US$11.50, suggesting that the forecast performance does not have a long term impact on the company’s valuation. 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. There are some variant perceptions on ICL Group, with the most bullish analyst valuing it at US$45.18 and the most bearish at US$31.07 per share. We would probably assign less value to the forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. With this in mind, we wouldn’t rely too heavily on the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.
Of course, another way to look at these forecasts is to place them into context against the industry itself. The analysts are definitely expecting ICL Group’s growth to accelerate, with the forecast 29% annualised growth to the end of 2022 ranking favourably alongside historical growth of 3.6% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 11% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect ICL Group to grow faster than the wider 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. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. Some investors might be disappointed to see that the price target is unchanged, but we feel that improving fundamentals are usually a positive – assuming these forecasts are met! So ICL Group could be a good candidate for more research.
These earnings upgrades look like a sterling endorsement, but before diving in – you should know that we’ve spotted 3 potential flags with ICL Group, including a weak balance sheet. For more information, you can click through to our platform to learn more about this and the 2 other flags we’ve identified .
Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.
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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.