Afrimat Limited Beat Analyst Profit Forecasts, And Analysts Have New Estimates

The half-year results for Afrimat Limited (JSE:AFT) were released last week, making it a good time to revisit its performance. Although revenues of R5.1b were in line with analyst expectations, Afrimat surprised on the earnings front, with an unexpected (statutory) profit of R0.026 per share a nice improvement on the losses that the analystsforecast. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

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Taking into account the latest results, the current consensus from Afrimat's twin analysts is for revenues of R10.3b in 2027. This would reflect a reasonable 5.4% increase on its revenue over the past 12 months. Afrimat is also expected to turn profitable, with statutory earnings of R1.00 per share. In the lead-up to this report, the analysts had been modelling revenues of R10.3b and earnings per share (EPS) of R1.40 in 2027. The analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a large cut to EPS estimates.

View our latest analysis for Afrimat

Althoughthe analysts have revised their earnings forecasts for next year, they've also lifted the consensus price target 9.1% to R48.00, suggesting the revised estimates are not indicative of a weaker long-term future for the 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. We would highlight that Afrimat's revenue growth is expected to slow, with the forecast 11% annualised growth rate until the end of 2027 being well below the historical 19% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 17% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Afrimat.

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. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse 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 least one analyst has provided forecasts out to 2029, which can be seen for free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 1 warning sign for Afrimat that you should be aware of.

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