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The first-quarter results for Core Laboratories N.V. (NYSE:CLB) were released last week, making it a good time to revisit its performance. Revenues of US$108m fell slightly short of expectations, but earnings were a definite bright spot, with statutory per-share profits of US$0.18 an impressive 43% ahead of estimates. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. 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 Core Laboratories' eleven analysts is for revenues of US$484.7m in 2021, which would reflect a notable 9.4% increase on its sales over the past 12 months. Per-share earnings are expected to leap 108% to US$0.90. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$479.5m and earnings per share (EPS) of US$0.86 in 2021. So the consensus seems to have become somewhat more optimistic on Core Laboratories' earnings potential following these results.
The consensus price target was unchanged at US$29.85, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Core Laboratories, with the most bullish analyst valuing it at US$44.00 and the most bearish at US$17.00 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the 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. For example, we noticed that Core Laboratories' rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 13% growth to the end of 2021 on an annualised basis. That is well above its historical decline of 3.5% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 6.4% per year. So it looks like Core Laboratories is expected to grow faster than its competitors, at least for a while.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Core Laboratories' earnings potential next year. 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$29.85, with the latest estimates not enough to have an impact on their price targets.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Core Laboratories going out to 2025, and you can see them free on our platform here.
Even so, be aware that Core Laboratories is showing 3 warning signs in our investment analysis , you should know about...
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