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Earnings Update: RPC, Inc. (NYSE:RES) Just Reported Its Full-Year Results And Analysts Are Updating Their Forecasts

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Simply Wall St
·4 min read
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RPC, Inc. (NYSE:RES) defied analyst predictions to release its annual results, which were ahead of market expectations. RPC beat expectations with revenues of US$598m arriving 4.0% ahead of forecasts. The company also reported a statutory loss of US$1.00, 3.8% smaller than was expected. 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 thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

See our latest analysis for RPC

earnings-and-revenue-growth
earnings-and-revenue-growth

Following the latest results, RPC's nine analysts are now forecasting revenues of US$642.8m in 2021. This would be a modest 7.4% improvement in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 82% to US$0.18. Before this earnings announcement, the analysts had been modelling revenues of US$620.1m and losses of US$0.19 per share in 2021. So there seems to have been a moderate uplift in analyst sentiment with the latest consensus release, given the upgrades to both revenue and loss per share forecasts for this year.

Despite these upgrades,the analysts have not made any major changes to their price target of US$3.17, implying that their latest estimates don't have a long term impact on what they think the stock is worth. 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. There are some variant perceptions on RPC, with the most bullish analyst valuing it at US$4.50 and the most bearish at US$1.00 per share. 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. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

Of course, another way to look at these forecasts is to place them into context against the industry itself. The analysts are definitely expecting RPC's growth to accelerate, with the forecast 7.4% growth ranking favourably alongside historical growth of 0.2% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 6.3% next year. RPC is expected to grow at about the same rate as its industry, so it's not clear that we can draw any conclusions from its growth relative to competitors.

The Bottom Line

The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. They also upgraded their revenue forecasts, although the latest estimates suggest that RPC will grow in line with the overall industry. The consensus price target held steady at US$3.17, 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 RPC going out to 2023, and you can see them free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 1 warning sign for RPC that you should be aware of.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.