Helmerich & Payne, Inc. (NYSE:HP) investors will be delighted, with the company turning in some strong numbers with its latest results. It looks like a positive result overall, with revenues of US$1.8b beating forecasts by 3.5%. Statutory losses of US$4.60 per share were 3.5% smaller than the analysts expected, likely helped along by the higher revenues. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. 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 16 analysts covering Helmerich & Payne provided consensus estimates of US$1.02b revenue in 2021, which would reflect a substantial 43% decline on its sales over the past 12 months. Losses are predicted to fall substantially, shrinking 40% to US$2.74. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$969.5m and losses of US$2.52 per share in 2021. So it's pretty clear consensus is mixed on Helmerich & Payne after the new consensus numbers; while the analysts lifted revenue numbers, they also administered a per-share loss expectations.
There was no major change to the consensus price target of US$18.55, with growing revenues seemingly enough to offset the concern of growing losses. 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 Helmerich & Payne analyst has a price target of US$31.00 per share, while the most pessimistic values it at US$10.00. With such a wide range in price targets, analysts are almost certainly betting on widely divergent outcomes in the underlying business. 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. We would highlight that sales are expected to reverse, with the forecast 43% revenue decline a notable change from historical growth of 3.7% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 5.4% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Helmerich & Payne is expected to lag the wider industry.
The Bottom Line
The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Helmerich & Payne. They also upgraded their revenue estimates for next year, even though sales are expected to grow slower than the wider industry. The consensus price target held steady at US$18.55, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn't be too quick to come to a conclusion on Helmerich & Payne. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Helmerich & Payne analysts - going out to 2024, and you can see them free on our platform here.
Before you take the next step you should know about the 2 warning signs for Helmerich & Payne (1 is a bit unpleasant!) that we have uncovered.
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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