Analysts Just Published A Bright New Outlook For Centennial Resource Development, Inc.'s (NASDAQ:CDEV)
Centennial Resource Development, Inc. (NASDAQ:CDEV) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's statutory forecasts. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with analysts modelling a real improvement in business performance.
Following the upgrade, the latest consensus from Centennial Resource Development's eight analysts is for revenues of US$1.6b in 2022, which would reflect a major 36% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to shoot up 136% to US$1.56. Previously, the analysts had been modelling revenues of US$1.4b and earnings per share (EPS) of US$1.33 in 2022. So we can see there's been a pretty clear increase in analyst sentiment in recent times, with both revenues and earnings per share receiving a decent lift in the latest estimates.
View our latest analysis for Centennial Resource Development
Despite these upgrades, the analysts have not made any major changes to their price target of US$10.73, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. 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. The most optimistic Centennial Resource Development analyst has a price target of US$13.00 per share, while the most pessimistic values it at US$8.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Centennial Resource Development shareholders.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's clear from the latest estimates that Centennial Resource Development's rate of growth is expected to accelerate meaningfully, with the forecast 51% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 16% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue shrink 4.5% per year. So it's clear with the acceleration in growth, Centennial Resource Development is expected to grow meaningfully faster than the wider industry.
The Bottom Line
The most important thing to take away from this upgrade is that analysts upgraded their earnings per share estimates for this year, expecting improving business conditions. Fortunately, they also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. The lack of change in the price target is puzzling, but with a serious upgrade to this year's earnings expectations, it might be time to take another look at Centennial Resource Development.
Analysts are clearly in love with Centennial Resource Development at the moment, but before diving in - you should be aware that we've identified some warning flags with the business, such as recent substantial insider selling. You can learn more, and discover the 3 other risks we've identified, for 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 upgrading 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.
