It's been a good week for Cimarex Energy Co. (NYSE:XEC) shareholders, because the company has just released its latest quarterly results, and the shares gained 2.8% to US$69.02. Sales of US$679m surpassed estimates by 9.2%, although statutory earnings per share missed badly, coming in 29% below expectations at US$1.25 per share. 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 current consensus from Cimarex Energy's twelve analysts is for revenues of US$2.47b in 2021, which would reflect a substantial 40% increase on its sales over the past 12 months. Cimarex Energy is also expected to turn profitable, with statutory earnings of US$7.34 per share. In the lead-up to this report, the analysts had been modelling revenues of US$2.46b and earnings per share (EPS) of US$7.27 in 2021. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
It will come as no surprise then, to learn that the consensus price target is largely unchanged at US$82.81. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Cimarex Energy at US$109 per share, while the most bearish prices it at US$51.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's clear from the latest estimates that Cimarex Energy's rate of growth is expected to accelerate meaningfully, with the forecast 56% annualised revenue growth to the end of 2021 noticeably faster than its historical growth of 8.4% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 4.5% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Cimarex Energy is expected to grow much faster than its industry.
The Bottom Line
The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target held steady at US$82.81, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn't be too quick to come to a conclusion on Cimarex Energy. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Cimarex Energy going out to 2025, and you can see them free on our platform here..
Don't forget that there may still be risks. For instance, we've identified 3 warning signs for Cimarex Energy that 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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