It's been a good week for Hess Midstream LP (NYSE:HESM) shareholders, because the company has just released its latest quarterly results, and the shares gained 2.9% to US$16.16. Statutory earnings per share of US$0.35 unfortunately missed expectations by 17%, although it was encouraging to see revenues of US$291m exceed expectations by 6.6%. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Hess Midstream after the latest results.
Taking into account the latest results, the current consensus from Hess Midstream's dual analysts is for revenues of US$1.08b in 2020, which would reflect a notable 14% increase on its sales over the past 12 months. Statutory earnings per share are expected to tumble 51% to US$1.54 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$1.05b and earnings per share (EPS) of US$1.54 in 2020. So it looks like there's been no major change in sentiment following the latest results, although the analysts have made a slight bump in to revenue forecasts.
Even though revenue forecasts increased, the consensus price target 13% to US$19.40, perhaps suggesting thatthe analysts have become more pessimistic about the lack of earnings growth.
Of course, another way to look at these forecasts is to place them into context against the industry itself. Next year brings more of the same, according to the analysts, with revenue forecast to grow 14%, in line with its 14% annual growth over the past five years. Compare this with the wider industry, which analyst estimates (in aggregate) suggest will see revenues grow 9.2% next year. So it's pretty clear that Hess Midstream is forecast to grow substantially faster than its industry.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Happily, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
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. At least one analyst has provided forecasts out to 2022, which can be seen for free on our platform here.
We don't want to rain on the parade too much, but we did also find 5 warning signs for Hess Midstream (1 is concerning!) that you need to be mindful of.
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