Bonanza Creek Energy, Inc. (NYSE:BCEI) missed earnings with its latest quarterly results, disappointing overly-optimistic forecasters. Results showed a clear earnings miss, with US$59m revenue coming in 9.5% lower than what the analystsexpected. Statutory earnings per share (EPS) of US$0.16 missed the mark badly, arriving some 78% below what was expected. 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 thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Following the latest results, Bonanza Creek Energy's five analysts are now forecasting revenues of US$260.8m in 2021. This would be a reasonable 3.7% improvement in sales compared to the last 12 months. Statutory earnings per share are forecast to nosedive 28% to US$2.53 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$260.9m and earnings per share (EPS) of US$2.64 in 2021. 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 the analysts did make a minor downgrade to their earnings per share forecasts.
It might be a surprise to learn that the consensus price target was broadly unchanged at US$29.17, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. 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. Currently, the most bullish analyst values Bonanza Creek Energy at US$47.00 per share, while the most bearish prices it at US$21.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
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 can infer from the latest estimates that forecasts expect a continuation of Bonanza Creek Energy'shistorical trends, as next year's 3.7% revenue growth is roughly in line with 3.1% annual revenue growth over the past five years. Compare this with the wider industry (in aggregate), which analyst estimates suggest will see revenues grow 11% next year. So it's pretty clear that Bonanza Creek Energy is expected to grow slower than similar companies in the same industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Bonanza Creek Energy's revenues are expected to perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Bonanza Creek Energy going out to 2022, and you can see them free on our platform here..
Before you take the next step you should know about the 3 warning signs for Bonanza Creek Energy (1 is significant!) that we have uncovered.
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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