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The investors in Falcon Minerals Corporation's (NASDAQ:FLMN) will be rubbing their hands together with glee today, after the share price leapt 21% to US$2.22 in the week following its quarterly results. It looks like a pretty bad result, all things considered. Although revenues of US$9.7m were in line with analyst predictions, statutory earnings fell badly short, missing estimates by 67% to hit US$0.01 per share. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Taking into account the latest results, the consensus forecast from Falcon Minerals' six analysts is for revenues of US$52.6m in 2021, which would reflect a substantial 24% improvement in sales compared to the last 12 months. Per-share earnings are expected to soar 87% to US$0.19. Before this earnings report, the analysts had been forecasting revenues of US$53.3m and earnings per share (EPS) of US$0.20 in 2021. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.
It might be a surprise to learn that the consensus price target was broadly unchanged at US$4.08, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Falcon Minerals analyst has a price target of US$6.60 per share, while the most pessimistic values it at US$2.50. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how analysts think this business will perform. 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.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. For example, we noticed that Falcon Minerals' rate of growth is expected to accelerate meaningfully, with revenues forecast to grow 24%, well above its historical decline of 12% a year over the past five years. Compare this against analyst estimates for the wider industry, which suggest that (in aggregate) industry revenues are expected to grow 11% next year. So it looks like Falcon Minerals is expected to grow faster than its competitors, at least for a while.
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. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster 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.
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. At Simply Wall St, we have a full range of analyst estimates for Falcon Minerals going out to 2022, and you can see them free on our platform here..
Don't forget that there may still be risks. For instance, we've identified 3 warning signs for Falcon Minerals (1 doesn't sit too well with us) 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.
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