U.S. Markets open in 42 mins
  • S&P Futures

    -12.25 (-0.33%)
  • Dow Futures

    -138.00 (-0.46%)
  • Nasdaq Futures

    -53.00 (-0.43%)
  • Russell 2000 Futures

    -8.90 (-0.48%)
  • Crude Oil

    -0.15 (-0.34%)
  • Gold

    +3.90 (+0.21%)
  • Silver

    -0.11 (-0.46%)

    +0.0003 (+0.0242%)
  • 10-Yr Bond

    0.0000 (0.00%)
  • Vix

    +0.40 (+1.94%)

    -0.0123 (-0.9137%)

    +0.2760 (+0.2646%)

    +152.29 (+0.80%)
  • CMC Crypto 200

    -4.50 (-1.18%)
  • FTSE 100

    +22.75 (+0.36%)
  • Nikkei 225

    +13.44 (+0.05%)

What Does The Future Hold For Nine Energy Service, Inc. (NYSE:NINE)? These Analysts Have Been Cutting Their Estimates

Simply Wall St
·3 min read

Today is shaping up negative for Nine Energy Service, Inc. (NYSE:NINE) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic. The stock price has risen 5.1% to US$0.88 over the past week. Investors could be forgiven for changing their mind on the business following the downgrade; but it's not clear if the revised forecasts will lead to selling activity.

Following the downgrade, the consensus from four analysts covering Nine Energy Service is for revenues of US$404m in 2020, implying a stressful 51% decline in sales compared to the last 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 65% to US$2.61. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$462m and losses of US$2.39 per share in 2020. Ergo, there's been a clear change in sentiment, with the analysts administering a notable cut to this year's revenue estimates, while at the same time increasing their loss per share forecasts.

Check out our latest analysis for Nine Energy Service

NYSE:NINE Past and Future Earnings April 29th 2020
NYSE:NINE Past and Future Earnings April 29th 2020

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that sales are expected to reverse, with the forecast 51% revenue decline a notable change from historical growth of 21% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue decline 1.6% annually for the foreseeable future. So it's pretty clear that Nine Energy Service's revenues are expected to shrink faster than the wider industry.

The Bottom Line

The most important thing to note from this downgrade is that the consensus increased its forecast losses this year, suggesting all may not be well at Nine Energy Service. Unfortunately they also cut their revenue estimates for this year, and they expect sales to lag the wider market. That said, earnings per share are more important for creating value for shareholders. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Nine Energy Service going forwards.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple Nine Energy Service analysts - going out to 2022, and you can see them free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.