It's been a mediocre week for Exterran Corporation (NYSE:EXTN) shareholders, with the stock dropping 19% to US$5.10 in the week since its latest yearly results. It was an okay result overall, with revenues coming in at US$1.3b, roughly what analysts had been expecting. Following the result, 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 analysts have changed their earnings models, following these results.
Taking into account the latest results, the current consensus, from the three analysts covering Exterran, is for revenues of US$936.0m in 2020, which would reflect a concerning 29% reduction in Exterran's sales over the past 12 months. Before this earnings result, analysts had predicted US$1.05b revenue in 2020, although there was no accompanying EPS estimate. It looks analysts have become a fair bit less optimistic on Exterran's prospects, given the real cut to revenue estimates after the latest results.
The average analyst price target fell 9.3% to US$16.17, with analysts clearly having become less optimistic about Exterran's prospects following its latest earnings. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Exterran, with the most bullish analyst valuing it at US$17.00 and the most bearish at US$15.00 per share. Still, with such a tight range of estimates, it suggests analysts have a pretty good idea of what they think the company is worth.
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. One thing that stands out from these estimates is that, even though revenues are forecast to keep falling, the decline is expected to accelerate. Analysts have modelled a 29% decline next year, compared to a historical decline of 9.9% per annum for the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the market are forecast to see their revenue decline 3.7% per year. So it looks like Exterran is also expected to see its revenues decline at a faster rate than the wider market.
The Bottom Line
The biggest takeaway for us from these new estimates is the bullish forecast for profits next year. Unfortunately, analysts also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider market. Even so, earnings per share are more important to the intrinsic value of the business. Analysts also downgraded their price target, suggesting that the latest news has led analysts to become more pessimistic about the intrinsic value of the business.
At least one of Exterran's three analysts has provided estimates out to 2022, which can be seen for free on our platform here.
It might also be worth considering whether Exterran's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
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