It's been a mediocre week for Hess Corporation (NYSE:HES) shareholders, with the stock dropping 12% to US$56.57 in the week since its latest full-year results. It looks like the results were pretty good overall. While revenues of US$6.3b were in line with analyst predictions, statutory losses were much smaller than expected, with Hess losing US$1.37 per share. This is an important time for investors, as they can track a company's performance in its report, look at what top analysts are forecasting for next year, and see if there has been any change to expectations for the business. We've gathered the most recent statutory forecasts to see whether analysts have changed their earnings models, following these results.
Following the latest results, Hess's 13 analysts are now forecasting revenues of US$7.14b in 2020. This would be a solid 13% improvement in sales compared to the last 12 months. Per-share statutory losses are expected to explode, reaching US$0.28 per share. In the lead-up to this report, analysts had been modelling revenues of US$7.16b and earnings per share (EPS) of US$0.50 in 2020. While analysts have made no real change to their revenue estimates, we can see that the consensus is now modelling a loss next year - a clear dip in sentiment compared to previous forecasts for a profit.
As a result, there was no major change to the consensus price target of US$72.81, with analysts implicitly confirming that the business looks to be performing in line with expectations, despite higher forecast losses. The consensus price target just an average of individual analyst targets, so - considering that the price target changed, it would be handy to see how wide the range of underlying estimates is. The most optimistic Hess analyst has a price target of US$88.00 per share, while the most pessimistic values it at US$55.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
It can be useful to take a broader overview by seeing how analyst forecasts compare, both to the Hess's past performance and to peers in the same market. For example, we noticed that Hess's rate of growth is expected to accelerate meaningfully, with revenues forecast to grow at 13%, well above its historical decline of 7.3% a year over the past five years. Compare this against analyst estimates for the wider market, which suggest that (in aggregate) market revenues are expected to grow 3.9% next year. Although Hess's revenues are expected to improve, it seems that analysts are also expecting it to grow faster than the wider market.
The Bottom Line
The most important thing to take away is that analysts are expecting Hess to become unprofitable next year. Happily, there were no major changes to revenue forecasts, with analysts still expecting the business to grow faster than the wider market. The consensus price target held steady at US$72.81, with the latest estimates not enough to have an impact on analysts' estimated valuations.
Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Hess analysts - going out to 2024, and you can see them free on our platform here.
You can also view our analysis of Hess's balance sheet, and whether we think Hess is carrying too much debt, for free on our platform here.
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