Some Analysts Just Cut Their RPC, Inc. (NYSE:RES) Estimates
Today is shaping up negative for RPC, Inc. (NYSE:RES) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.
Following the latest downgrade, the three analysts covering RPC provided consensus estimates of US$1.7b revenue in 2023, which would reflect an uncomfortable 9.2% decline on its sales over the past 12 months. Before the latest update, the analysts were foreseeing US$1.9b of revenue in 2023. The consensus view seems to have become more pessimistic on RPC, noting the measurable cut to revenue estimates in this update.
Check out our latest analysis for RPC
We'd point out that there was no major changes to their price target of US$9.80, suggesting the latest estimates were not enough to shift their view on the value of the business. 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 RPC, with the most bullish analyst valuing it at US$13.00 and the most bearish at US$7.00 per share. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes 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. One more thing stood out to us about these estimates, and it's the idea that RPC's decline is expected to accelerate, with revenues forecast to fall at an annualised rate of 17% to the end of 2023. This tops off a historical decline of 4.0% a year over the past five years. Compare this against analyst estimates for companies in the broader industry, which suggest that revenues (in aggregate) are expected to grow 9.0% annually. So it's pretty clear that, while it does have declining revenues, the analysts also expect RPC to suffer worse than the wider industry.
The Bottom Line
The clear low-light was that analysts slashing their revenue forecasts for RPC this year. They're also anticipating slower 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 RPC after today.
Want more information? We have estimates for RPC from its three analysts out until 2025, and you can see them 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.
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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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