These Analysts Just Made A Meaningful Downgrade To Their Brigham Minerals, Inc. (NYSE:MNRL) EPS Forecasts
Today is shaping up negative for Brigham Minerals, Inc. (NYSE:MNRL) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting analysts have soured majorly on the business. Shares are up 4.6% to US$10.00 in the past week. We'd be curious to see if the downgrade is enough to reverse investor sentiment on the business.
Following the downgrade, the consensus from six analysts covering Brigham Minerals is for revenues of US$83m in 2020, implying an uneasy 18% decline in sales compared to the last 12 months. Statutory earnings per share are anticipated to tumble 37% to US$0.17 in the same period. Before this latest update, the analysts had been forecasting revenues of US$95m and earnings per share (EPS) of US$0.21 in 2020. It looks like analyst sentiment has declined substantially, with a substantial drop in revenue estimates and a pretty serious decline to earnings per share numbers as well.
Check out our latest analysis for Brigham Minerals
It'll come as no surprise then, to learn that the analysts have cut their price target 6.6% to US$14.09. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Brigham Minerals at US$19.00 per share, while the most bearish prices it at US$9.00. 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.
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 18% revenue decline a notable change from historical growth of 51% over the last year. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue decline 1.3% annually for the foreseeable future. The forecasts do look bearish for Brigham Minerals, since they're expecting it to shrink faster than the industry.
The Bottom Line
The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Unfortunately they also cut their revenue estimates for this year, and they expect sales to lag the wider market. That said, earnings per share are more important for creating value for shareholders. Given the scope of the downgrades, it would not be a surprise to see the market become more wary of the business.
So things certainly aren't looking great, and you should also know that we've spotted some potential warning signs with Brigham Minerals, including concerns around earnings quality. For more information, you can click here to discover this and the 2 other warning signs we've identified.
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.
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.
