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Shareholders might have noticed that KLX Energy Services Holdings, Inc. (NASDAQ:KLXE) filed its third-quarter result this time last week. The early response was not positive, with shares down 2.4% to US$7.23 in the past week. Revenues were 22% better than analyst models forecast, at US$71m. Perhaps unsurprisingly, statutory losses were also slightly larger than expected, at US$4.56 per share, reflecting the higher costs which were likely incurred in generating that revenue. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the consensus forecast from KLX Energy Services Holdings' three analysts is for revenues of US$386.0m in 2022, which would reflect a major 34% improvement in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 76% to US$14.15. Before this earnings announcement, the analysts had been modelling revenues of US$405.8m and losses of US$20.95 per share in 2022. While the revenue estimates fell, sentiment seems to have improved, with the analysts making a losses per share in particular.
The consensus price target fell 35% to US$9.25, with the dip in revenue estimates clearly souring sentiment, despite the forecast reduction in losses.
Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that KLX Energy Services Holdings' rate of growth is expected to accelerate meaningfully, with the forecast 34% revenue growth noticeably faster than its historical growth of 13%p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 5.5% next year. Factoring in the forecast acceleration in revenue, it's pretty clear that KLX Energy Services Holdings is expected to grow much faster than its industry.
The Bottom Line
The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. They also downgraded their revenue estimates, although industry data suggests that KLX Energy Services Holdings' revenues are expected to grow faster than the wider industry. Even so, earnings are more important to the intrinsic value of the business. 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. We have estimates - from multiple KLX Energy Services Holdings analysts - going out to 2025, and you can see them 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 KLX Energy Services Holdings (2 are a bit unpleasant!) that you need to be mindful of.
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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