Calfrac Well Services Ltd. (TSE:CFW) Analysts Just Trimmed Their Revenue Forecasts By 18%
One thing we could say about the analysts on Calfrac Well Services Ltd. (TSE:CFW) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.
Following the downgrade, the consensus from four analysts covering Calfrac Well Services is for revenues of CA$1.6b in 2024, implying a definite 16% decline in sales compared to the last 12 months. Statutory earnings per share are supposed to tumble 57% to CA$1.00 in the same period. Before this latest update, the analysts had been forecasting revenues of CA$1.9b and earnings per share (EPS) of CA$1.51 in 2024. Indeed, we can see that the analysts are a lot more bearish about Calfrac Well Services' prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.
View our latest analysis for Calfrac Well Services
The consensus price target fell 25% to CA$5.50, with the weaker earnings outlook clearly leading analyst valuation estimates.
Of course, another way to look at these forecasts is to place them into context against the industry itself. Over the past five years, revenues have declined around 3.4% annually. Worse, forecasts are essentially predicting the decline to accelerate, with the estimate for an annualised 16% decline in revenue until the end of 2024. Compare this against analyst estimates for companies in the broader industry, which suggest that revenues (in aggregate) are expected to decline 11% annually. So it's pretty clear that Calfrac Well Services sales are expected to decline at a faster rate than the wider industry.
The Bottom Line
The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Unfortunately they also downgraded their revenue estimates, and our aggregation of analyst estimates suggests that Calfrac Well Services revenue is expected to perform worse than the wider market. Furthermore, there was a cut to the price target, suggesting that the latest news has led to more pessimism about the intrinsic value of the business. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Calfrac Well Services going forwards.
So things certainly aren't looking great, and you should also know that we've spotted some potential warning signs with Calfrac Well Services, including dilutive stock issuance over the past year. Learn more, and discover the 2 other risks we've identified, for free 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.
