Investors in Patterson-UTI Energy, Inc. (NASDAQ:PTEN) had a good week, as its shares rose 9.1% to close at US$2.89 following the release of its third-quarter results. The business exceeded revenue expectations with sales of US$207m coming in 4.2% ahead of forecasts. Statutory losses were US$0.60 a share, in line with what the analysts predicted. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. 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 19 analysts covering Patterson-UTI Energy provided consensus estimates of US$1.00b revenue in 2021, which would reflect a painful 28% decline on its sales over the past 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 45% to US$2.28. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$942.3m and losses of US$2.30 per share in 2021.
The consensus price target held steady at US$3.85despite the upgrade to revenue forecasts and ongoing losses. The analysts seems to think the business is otherwise performing roughly in line with expectations. 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 Patterson-UTI Energy at US$6.00 per share, while the most bearish prices it at US$2.00. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely different views on what kind of performance this business can generate. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.
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. These estimates imply that sales are expected to slow, with a forecast revenue decline of 28%, a significant reduction from annual growth of 10% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 5.2% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Patterson-UTI Energy is expected to lag the wider industry.
The Bottom Line
The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. Fortunately, they also upgraded their revenue estimates, although our data indicates sales are expected to perform worse than the wider industry. The consensus price target held steady at US$3.85, 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 Patterson-UTI 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 Patterson-UTI Energy going out to 2024, and you can see them free on our platform here..
Even so, be aware that Patterson-UTI Energy is showing 3 warning signs in our investment analysis , and 1 of those makes us a bit uncomfortable...
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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