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Hess Corporation (NYSE:HES) shareholders are probably feeling a little disappointed, since its shares fell 5.6% to US$37.18 in the week after its latest third-quarter results. The results don't look great, especially considering that statutory losses grew 13% toUS$0.80 per share. Revenues of US$1,176,000,000 did beat expectations by 3.6%, but it looks like a bit of a cold comfort. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Taking into account the latest results, the 18 analysts covering Hess provided consensus estimates of US$4.50b revenue in 2021, which would reflect a discernible 7.9% decline on its sales over the past 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 80% to US$2.12. Before this earnings announcement, the analysts had been modelling revenues of US$4.47b and losses of US$2.24 per share in 2021. It looks like there's been a modest increase in sentiment in the recent updates, with the analysts becoming a bit more optimistic in their predictions for losses per share, even though the revenue numbers were unchanged.
The average price target held steady at US$53.64, seeming to indicate that business is performing in line with expectations. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Hess analyst has a price target of US$66.00 per share, while the most pessimistic values it at US$34.00. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Hess' past performance and to peers in the same industry. These estimates imply that sales are expected to slow, with a forecast revenue decline of 7.9%, a significant reduction from annual growth of 0.2% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 11% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Hess is expected to lag the wider industry.
The Bottom Line
The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. The consensus price target held steady at US$53.64, with the latest estimates not enough to have an impact on their price targets.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Hess going out to 2024, and you can see them free on our platform here..
Don't forget that there may still be risks. For instance, we've identified 4 warning signs for Hess (1 is concerning) you should be aware of.
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. 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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