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GasLog Ltd. (NYSE:GLOG) just released its latest third-quarter results and things are looking bullish. GasLog beat expectations with revenues of US$152m arriving 3.0% ahead of forecasts. The company also reported a statutory loss of US$0.03, 8.3% smaller than was expected. Following the result, the 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 the analysts have changed their earnings models, following these results.
Taking into account the latest results, the consensus forecast from GasLog's six analysts is for revenues of US$728.0m in 2021, which would reflect a decent 9.7% improvement in sales compared to the last 12 months. Earnings are expected to improve, with GasLog forecast to report a statutory profit of US$0.50 per share. Before this earnings report, the analysts had been forecasting revenues of US$727.9m and earnings per share (EPS) of US$0.50 in 2021. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
With no major changes to earnings forecasts, the consensus price target fell 14% to US$4.72, suggesting that the analysts might have previously been hoping for an earnings upgrade. 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. Currently, the most bullish analyst values GasLog at US$10.00 per share, while the most bearish prices it at US$2.25. With such a wide range in price targets, analysts are almost certainly betting on widely divergent outcomes in the underlying business. 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.
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. We can infer from the latest estimates that forecasts expect a continuation of GasLog'shistorical trends, as next year's 9.7% revenue growth is roughly in line with 11% annual revenue growth over the past five years. Compare this with the wider industry, which analyst estimates (in aggregate) suggest will see revenues grow 9.3% next year. It's clear that while GasLog's revenue growth is expected to continue on its current trajectory, it's only expected to grow in line with the industry itself.
The Bottom Line
The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of GasLog's future valuation.
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 estimates - from multiple GasLog analysts - going out to 2022, and you can see them free on our platform here.
You should always think about risks though. Case in point, we've spotted 4 warning signs for GasLog 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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