Concho Resources Inc. Full-Year Results Just Came Out: Here's What Analysts Are Forecasting For Next Year
It's been a good week for Concho Resources Inc. (NYSE:CXO) shareholders, because the company has just released its latest full-year results, and the shares gained 4.8% to US$82.45. Revenues of US$4.6b arrived in line with expectations, although statutory losses per share were US$3.55, an impressive 747% smaller than what broker models predicted. Earnings are an important time for investors, as they can track a company's performance, look at what top analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Check out our latest analysis for Concho Resources
Taking into account the latest results, the current consensus from Concho Resources's 19 analysts is for revenues of US$4.85b in 2020, which would reflect a modest 5.6% increase on its sales over the past 12 months. Concho Resources is also expected to turn profitable, with statutory earnings of US$3.88 per share. Yet prior to the latest earnings, analysts had been forecasting revenues of US$4.86b and earnings per share (EPS) of US$4.11 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 small dip in their earnings per share forecasts.
It might be a surprise to learn that the consensus price target was broadly unchanged at US$105, with analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Concho Resources at US$169 per share, while the most bearish prices it at US$80.00. 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.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's pretty clear that analysts expect Concho Resources's revenue growth will slow down substantially, with revenues next year expected to grow 5.6%, compared to a historical growth rate of 19% over the past five years. Compare this to the other companies in this market with analyst coverage, which are forecast to grow their revenue at 4.5% per year. Factoring in the forecast slowdown in growth, it looks like analysts are expecting Concho Resources to grow at about the same rate as the wider market.
The Bottom Line
The biggest concern with the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Concho Resources. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall market. The consensus price target held steady at US$105, with the latest estimates not enough to have an impact on analysts' estimated valuations.
Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Concho Resources analysts - going out to 2024, and you can see them free on our platform here.
You can also see whether Concho Resources is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.
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