Last week saw the newest annual earnings release from Lonestar Resources US Inc. (NASDAQ:LONE), an important milestone in the company's journey to build a stronger business. Revenues were in line with expectations, at US$195m, while statutory losses ballooned to US$4.48 per share. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Taking into account the latest results, Lonestar Resources US' four analysts currently expect revenues in 2020 to be US$197.0m, approximately in line with the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 98% to US$0.08. Before this earnings announcement, the analysts had been modelling revenues of US$204.4m and losses of US$0.15 per share in 2020. While the revenue estimates fell, sentiment seems to have improved, with the analysts making a losses per share in particular.
The analysts have cut their price target 79% to US$1.00 per share, suggesting that the declining revenue was a more crucial indicator than the forecast reduction in losses.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Lonestar Resources US' past performance and to peers in the same industry. We would highlight that Lonestar Resources US' revenue growth is expected to slow, with forecast 0.9% increase next year well below the historical 22%p.a. growth over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue shrink 3.0% per year. So it's clear that despite the slowdown in growth, Lonestar Resources US is still expected to grow meaningfully faster than the wider industry.
The Bottom Line
The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. Unfortunately, they also downgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. 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.
With that in mind, we wouldn't be too quick to come to a conclusion on Lonestar Resources US. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Lonestar Resources US going out to 2021, and you can see them free on our platform here..
And what about risks? Every company has them, and we've spotted 4 warning signs for Lonestar Resources US (of which 1 doesn't sit too well with us!) you should know about.
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