Genesis Energy Limited Earnings Missed Analyst Estimates: Here's What Analysts Are Forecasting Now
The half-year results for Genesis Energy Limited (NZSE:GNE) were released last week, making it a good time to revisit its performance. Genesis Energy beat revenue forecasts by a solid 12% to hit NZ$1.3b. Statutory earnings per share fell 19% short of expectations, at NZ$0.058. 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. So we gathered the latest post-earnings forecasts to see what analysts' statutory forecasts suggest is in store for next year.
See our latest analysis for Genesis Energy
After the latest results, the consensus from Genesis Energy's seven analysts is for revenues of NZ$2.55b in 2020, which would reflect a discernible 4.6% decline in sales compared to the last year of performance. Statutory earnings per share are expected to surge 207% to NZ$0.057. Yet prior to the latest earnings, analysts had been forecasting revenues of NZ$2.49b and earnings per share (EPS) of NZ$0.064 in 2020. So it's pretty clear analysts have mixed opinions on Genesis Energy after the latest results; even though they upped their revenue numbers, it came at the cost of a substantial drop in per-share earnings expectations.
Curiously, the consensus price target rose 5.0% to NZ$3.00. We can only conclude that the forecast revenue growth is expected to offset the impact of the expected fall in earnings. 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. The most optimistic Genesis Energy analyst has a price target of NZ$3.55 per share, while the most pessimistic values it at NZ$2.40. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Genesis Energy shareholders.
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. We would highlight that sales are expected to reverse, with the forecast 4.6% revenue decline a notable change from historical growth of 6.1% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the market are forecast to see their revenue decline -0.9% annually for the foreseeable future. The forecasts do look bullish for Genesis Energy, since they're expecting it to grow faster than the market.
The Bottom Line
The most important thing to take away is that analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, they also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. Analysts also upgraded their price target, suggesting that analysts believe the intrinsic value of the business is likely to improve over time.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for Genesis Energy going out to 2022, and you can see them free on our platform here..
It might also be worth considering whether Genesis Energy's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.
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