ADAMA Ltd. (SZSE:000553) last week reported its latest yearly results, which makes it a good time for investors to dive in and see if the business is performing in line with expectations. Results overall were not great, with earnings of CN¥0.26 per share falling drastically short of analyst expectations. Meanwhile revenues hit CN¥37b and were slightly better than forecasts. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on ADAMA after the latest results.

View our latest analysis for ADAMA

Following the latest results, ADAMA's three analysts are now forecasting revenues of CN¥42.8b in 2023. This would be a notable 15% improvement in sales compared to the last 12 months. Per-share earnings are expected to surge 64% to CN¥0.43. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥38.9b and earnings per share (EPS) of CN¥0.51 in 2023. Although sales sentiment has improved substantially, the analysts have made a substantial drop in per-share earnings estimates, suggesting that the growth is not without cost.

The consensus price target fell 6.6% to CN¥10.39, suggesting that the analysts are primarily focused on earnings as the driver of value for this business. 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 ADAMA at CN¥11.38 per share, while the most bearish prices it at CN¥9.40. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.

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 analysts are definitely expecting ADAMA's growth to accelerate, with the forecast 15% annualised growth to the end of 2023 ranking favourably alongside historical growth of 7.7% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to see revenue growth of 19% annually. So it's clear that despite the acceleration in growth, ADAMA is expected to grow meaningfully slower than the industry average.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for ADAMA. They also upgraded their revenue estimates for next year, even though sales are expected to grow slower than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple ADAMA analysts - going out to 2025, and you can see them free on our platform here.

You still need to take note of risks, for example - ADAMA has 2 warning signs (and 1 which is a bit unpleasant) we think you should know about.

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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.