New Forecasts: Here's What Analysts Think The Future Holds For Capital Drilling Limited (LON:CAPD)
Capital Drilling Limited (LON:CAPD) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. The analysts have sharply increased their revenue numbers, with a view that Capital Drilling will make substantially more sales than they'd previously expected.
Following the upgrade, the current consensus from Capital Drilling's two analysts is for revenues of US$148m in 2020 which - if met - would reflect a major 29% increase on its sales over the past 12 months. Before the latest update, the analysts were foreseeing US$134m of revenue in 2020. It looks like there's been a clear increase in optimism around Capital Drilling, given the substantial gain in revenue forecasts.
View our latest analysis for Capital Drilling
The consensus price target rose 7.7% to US$1.15, with the analysts clearly more optimistic about Capital Drilling's prospects following this update. 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 Capital Drilling analyst has a price target of US$1.25 per share, while the most pessimistic values it at US$1.06. This is a very narrow spread of estimates, implying either that Capital Drilling is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's clear from the latest estimates that Capital Drilling's rate of growth is expected to accelerate meaningfully, with the forecast 29% revenue growth noticeably faster than its historical growth of 7.8% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to see a revenue decline of 1.0% next year. So it's clear with the acceleration in growth, Capital Drilling is expected to grow meaningfully faster than the wider industry.
The Bottom Line
The highlight for us was that analysts increased their revenue forecasts for Capital Drilling this year. They're also forecasting for revenues to perform better than companies in the wider market. There was also an increase in the price target, suggesting that there is more optimism baked into the forecasts than there was previously. Seeing the dramatic upgrade to this year's forecasts, it might be time to take another look at Capital Drilling.
Hungry for more information? We have analyst estimates for Capital Drilling going out to 2022, and you can see them free on our platform here.
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
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