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These Analysts Just Made An Downgrade To Their International Petroleum Corporation (TSE:IPCO) EPS Forecasts

The latest analyst coverage could presage a bad day for International Petroleum Corporation (TSE:IPCO), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.

After the downgrade, the consensus from International Petroleum's three analysts is for revenues of US$329m in 2020, which would reflect a concerning 40% decline in sales compared to the last year of performance. Before the latest update, the analysts were foreseeing US$437m of revenue in 2020. It looks like forecasts have become a fair bit less optimistic on International Petroleum, given the pretty serious reduction to revenue estimates.

View our latest analysis for International Petroleum

TSX:IPCO Past and Future Earnings March 31st 2020
TSX:IPCO Past and Future Earnings March 31st 2020

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. We would highlight that sales are expected to reverse, with the forecast 40% revenue decline a notable change from historical growth of 28% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 0.8% next year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - International Petroleum is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their revenue estimates for this year. They also expect company revenue to perform worse than the wider market. Given the serious cut to this year's outlook, it's clear that analysts have turned more bearish on International Petroleum, and we wouldn't blame shareholders for feeling a little more cautious themselves.

After a downgrade like this, it's pretty clear that previous forecasts were too optimistic. What's more, we've spotted several possible issues with International Petroleum's business, like major dilution from new stock issuance in the past year. Learn more, and discover the 1 other flag 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.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.

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