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Falcon Minerals Corporation (NASDAQ:FLMN) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's statutory forecasts. The consensus estimated revenue numbers rose, with their view now clearly much more bullish on the company's business prospects. Investors have been pretty optimistic on Falcon Minerals too, with the stock up 23% to US$4.89 over the past week. We'll be curious to see if these new estimates convince the market to lift the stock price higher still.
Following the upgrade, the most recent consensus for Falcon Minerals from its four analysts is for revenues of US$67m in 2021 which, if met, would be a substantial 67% increase on its sales over the past 12 months. Statutory earnings per share are presumed to surge 390% to US$0.24. Before this latest update, the analysts had been forecasting revenues of US$57m and earnings per share (EPS) of US$0.23 in 2021. The forecasts seem more optimistic now, with a nice gain to revenue and a small increase to earnings per share estimates.
It will come as no surprise to learn that the analysts have increased their price target for Falcon Minerals 9.1% to US$5.34 on the back of these upgrades. 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 Falcon Minerals analyst has a price target of US$7.80 per share, while the most pessimistic values it at US$4.00. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.
Of course, another way to look at these forecasts is to place them into context against the industry itself. One thing stands out from these estimates, which is that Falcon Minerals is forecast to grow faster in the future than it has in the past, with revenues expected to display 67% annualised growth until the end of 2021. If achieved, this would be a much better result than the 14% annual decline over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 9.0% per year. Not only are Falcon Minerals' revenues expected to improve, it seems that the analysts are also expecting it to grow 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, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. There was also a nice increase in the price target, with analysts apparently feeling that the intrinsic value of the business is improving. Seeing the dramatic upgrade to this year's forecasts, it might be time to take another look at Falcon Minerals.
Analysts are definitely bullish on Falcon Minerals, but no company is perfect. Indeed, you should know that there are several potential concerns to be aware of, including the risk of cutting its dividend. For more information, you can click through to our platform to learn more about this and the 2 other concerns we've identified .
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.
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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