Analysts Just Made A Substantial Upgrade To Their Ramaco Resources, Inc. (NASDAQ:METC) Forecasts

Celebrations may be in order for Ramaco Resources, Inc. (NASDAQ:METC) 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.

Following the upgrade, the most recent consensus for Ramaco Resources from its four analysts is for revenues of US$668m in 2023 which, if met, would be a huge 29% increase on its sales over the past 12 months. Per-share earnings are expected to bounce 50% to US$4.10. Prior to this update, the analysts had been forecasting revenues of US$586m and earnings per share (EPS) of US$3.19 in 2023. 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.

See our latest analysis for Ramaco Resources

As a result, it might be a surprise to see that the analysts have cut their price target 7.2% to US$12.85, which could suggest the forecast improvement in performance is not expected to last. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Ramaco Resources at US$16.00 per share, while the most bearish prices it at US$5.25. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

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. The period to the end of 2023 brings more of the same, according to the analysts, with revenue forecast to display 23% growth on an annualised basis. That is in line with its 26% annual growth over the past five years. Compare this with the broader industry (in aggregate), which analyst estimates suggest will see revenues fall 0.9% per year. So it's clear that not only is revenue growth expected to be maintained, but Ramaco Resources is expected to grow meaningfully faster than the wider industry.

The Bottom Line

The most important thing to take away from this upgrade is that analysts upgraded their earnings per share estimates for next year, expecting improving business conditions. Fortunately, they also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. A lower price target is not intuitively what we would expect from a company whose business prospects are improving - at least judging by these forecasts - but if the underlying fundamentals are strong, Ramaco Resources could be one for the watch list.

These earnings upgrades look like a sterling endorsement, but before diving in - you should know that we've spotted 4 potential warning signs with Ramaco Resources, including concerns around earnings quality. You can learn more, and discover the 2 other warning signs we've identified, for free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

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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.

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