News Flash: 3 Analysts Think Tidewater Inc. (NYSE:TDW) Earnings Are Under Threat
The latest analyst coverage could presage a bad day for Tidewater Inc. (NYSE:TDW), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon.
After the downgrade, the consensus from Tidewater's three analysts is for revenues of US$361m in 2020, which would reflect a sizeable 25% decline in sales compared to the last year of performance. Losses are predicted to fall substantially, shrinking 52% to US$1.72. However, before this estimates update, the consensus had been expecting revenues of US$437m and US$0.92 per share in losses. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a serious cut to their revenue forecasts while also expecting losses per share to increase.
See our latest analysis for Tidewater
The consensus price target fell 15% to US$7.67, implicitly signalling that lower earnings per share are a leading indicator for Tidewater's valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Tidewater analyst has a price target of US$10.00 per share, while the most pessimistic values it at US$5.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue shrink 0.2% per year. So it's pretty clear that Tidewater sales are expected to decline at a faster rate than the wider industry.
The Bottom Line
The most important thing to take away is that analysts increased their loss per share estimates for this year. Unfortunately they also downgraded their revenue estimates, and our aggregation of analyst estimates suggests that Tidewater revenue is expected to perform worse than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of Tidewater.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for Tidewater going out to 2021, 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.
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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. Thank you for reading.
