BW Offshore Limited (OB:BWO) shares fell 7.1% to kr61.05 in the week since its latest quarterly results. It looks like a pretty bad result, all things considered. Although revenues of US$267m were in line with analyst predictions, earnings fell badly short, missing estimates by 82% to hit US$0.03 per share. Analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we gathered the latest post-earnings forecasts to see what analysts are forecasting for next year.
After the latest results, the consensus from BW Offshore's six analysts is for revenues of US$1.06b in 2020, which would reflect a small 4.4% decline in sales compared to the last year of performance. Earnings per share are expected to shoot up 112% to US$0.95. Before this earnings report, analysts had been forecasting revenues of US$1.08b and earnings per share (EPS) of US$1.05 in 2020. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but analysts did make a minor downgrade to their earnings per share forecasts.
The consensus price target held steady at US$10.24, with analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. The consensus price target just an average of individual analyst targets, so - considering that the price target changed, it would be handy to see how wide the range of underlying estimates is. The most optimistic BW Offshore analyst has a price target of US$10.90 per share, while the most pessimistic values it at US$9.38. Still, with such a tight range of estimates, it suggests analysts have a pretty good idea of what they think the company is worth.
It can be useful to take a broader overview by seeing how analyst forecasts compare, both to the BW Offshore's past performance and to peers in the same market. One thing that stands out from these estimates is that, even though revenues are forecast to keep falling, the decline is expected to accelerate. Analysts have modelled a 4.4% decline next year, compared to a historical decline of 2.8% per annum for the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the market are forecast to see their revenue decline 12% per year. So it looks like BW Offshore is also expected to see its revenues decline at a faster rate than the wider market.
The Bottom Line
The biggest highlight of the new consensus is that analysts have reduced their earnings per share estimates, suggesting business headwinds could lay ahead for BW Offshore. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that BW Offshore's revenues are expected to perform worse than the wider market. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for BW Offshore going out to 2022, and you can see them free on our platform here..
You can also see whether BW Offshore is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
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