These Analysts Think Gibson Energy Inc.'s (TSE:GEI) Sales Are Under Threat
The analysts covering Gibson Energy Inc. (TSE:GEI) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.
Following the latest downgrade, the eight analysts covering Gibson Energy provided consensus estimates of CA$7.6b revenue in 2023, which would reflect a disturbing 29% decline on its sales over the past 12 months. Prior to the latest estimates, the analysts were forecasting revenues of CA$8.6b in 2023. The consensus view seems to have become more pessimistic on Gibson Energy, noting the substantial drop in revenue estimates in this update.
Check out our latest analysis for Gibson Energy
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. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 50% by the end of 2023. This indicates a significant reduction from annual growth of 9.7% 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 0.4% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Gibson Energy 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're also anticipating slower revenue growth than the wider market. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Gibson Energy going forwards.
Unfortunately, the earnings downgrade - if accurate - may also place pressure on Gibson Energy's mountain of debt, which could lead to some belt tightening for shareholders. See why we're concerned about Gibson Energy's balance sheet by visiting our risks dashboard for free on our platform here.
Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.
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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.
