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Bonanza Creek Energy, Inc. (NYSE:BCEI) shareholders will have a reason to smile today, with the analysts making substantial upgrades to next year's forecasts. The consensus estimated revenue numbers rose, with their view now clearly much more bullish on the company's business prospects. Bonanza Creek Energy has also found favour with investors, with the stock up a worthy 25% to US$21.73 over the past week. We'll be curious to see if these new estimates convince the market to lift the stock price higher still.
Following the upgrade, the current consensus from Bonanza Creek Energy's five analysts is for revenues of US$387m in 2021 which - if met - would reflect a major 65% increase on its sales over the past 12 months. Statutory earnings per share are presumed to shoot up 60% to US$3.09. Previously, the analysts had been modelling revenues of US$261m and earnings per share (EPS) of US$2.99 in 2021. Sentiment certainly seems to have improved in recent times, with a sizeable gain to revenue and a modest lift to earnings per share estimates.
Despite these upgrades, the analysts have not made any major changes to their price target of US$30.17, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Bonanza Creek Energy at US$47.00 per share, while the most bearish prices it at US$21.00. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Bonanza Creek Energy's past performance and to peers in the same industry. The analysts are definitely expecting Bonanza Creek Energy's growth to accelerate, with the forecast 65% growth ranking favourably alongside historical growth of 2.3% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 9.1% next year. Factoring in the forecast acceleration in revenue, it's pretty clear that Bonanza Creek Energy is expected to grow much faster than its industry.
The Bottom Line
The most important thing to take away from this upgrade is that analysts upgraded their earnings per share estimates for next year, expecting improving business conditions. They also upgraded their revenue estimates for next year, and sales are expected to grow faster than the wider market. Seeing the dramatic upgrade to next year's forecasts, it might be time to take another look at Bonanza Creek Energy.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Bonanza Creek Energy analysts - going out to 2022, and you can see them free on our platform here.
Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.
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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