There's been a major selloff in Gulfport Energy Corporation (NASDAQ:GPOR) shares in the week since it released its annual report, with the stock down 39% to US$0.77. Things were not great overall, with a surprise (statutory) loss of US$12.49 per share on revenues of US$1.3b, even though analysts had been expecting a profit. Earnings are an important time for investors, as they can track a company's performance, look at what top analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we gathered the latest post-earnings forecasts to see what analysts' statutory forecasts suggest is in store for next year.
Taking into account the latest results, the current consensus, from the ten analysts covering Gulfport Energy, is for revenues of US$917.6m in 2020, which would reflect a disturbing 32% reduction in Gulfport Energy's sales over the past 12 months. Gulfport Energy is also expected to turn profitable, with statutory earnings of US$0.10 per share. Before this earnings report, analysts had been forecasting revenues of US$1.06b and earnings per share (EPS) of US$0.10 in 2020. So there's been a clear change in analyst sentiment after these results, with analysts making a real cut to to revenues and reconfirming their earnings per share estimates.
The average analyst price target was reduced 5.7% to US$2.48, with the lower revenue forecasts indicating negative sentiment towards Gulfport Energy, even though earnings forecasts were unchanged. 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 Gulfport Energy analyst has a price target of US$5.00 per share, while the most pessimistic values it at US$0.75. 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 assign too much meaning to the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.
In addition, we can look to Gulfport Energy's past performance and see whether business is expected to improve, and if the company is expected to perform better than wider market. These estimates imply that sales are expected to slow, with a forecast revenue decline of 32% a significant reduction from annual growth of 23% over the last five years. Compare this with our data, which suggests that other companies in the same market are, in aggregate, expected to see their revenue grow 5.0% next year. It's pretty clear that Gulfport Energy's revenues are expected to perform substantially worse than the wider market.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. Unfortunately, analysts also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider market. Even so, earnings per share are more important to the intrinsic value of the business. Still, earnings are more important to the intrinsic value of the business. The consensus price target fell measurably, with analysts seemingly not reassured by the latest results, leading to a lower estimate of Gulfport Energy's future valuation.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Gulfport Energy going out to 2021, and you can see them free on our platform here.
You can also view our analysis of Gulfport Energy's balance sheet, and whether we think Gulfport Energy is carrying too much debt, for free on our platform here.
If you spot an error that warrants correction, please contact the editor at email@example.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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