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Newsflash: Northern Oil and Gas, Inc. (NYSEMKT:NOG) Analysts Have Been Trimming Their Revenue Forecasts

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·3 min read
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Today is shaping up negative for Northern Oil and Gas, Inc. (NYSEMKT:NOG) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Revenue estimates were cut sharply as analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well. Investors however, have been notably more optimistic about Northern Oil and Gas recently, with the stock price up a remarkable 10% to US$0.84 in the past week. It will be interesting to see if the downgrade has an impact on buying demand for the company's shares.

Following the latest downgrade, the current consensus, from the four analysts covering Northern Oil and Gas, is for revenues of US$444m in 2020, which would reflect a not inconsiderable 18% reduction in Northern Oil and Gas' sales over the past 12 months. Losses are expected to turn into profits real soon, with the analysts forecasting US$0.14 in per-share earnings US$0.14. Before this latest update, the analysts had been forecasting revenues of US$539m and earnings per share (EPS) of US$0.14 in 2020. Indeed, we can see that analyst sentiment has declined measurably after the new consensus came out, with a measurable cut to revenue estimates and a small dip in EPS estimates to boot.

View our latest analysis for Northern Oil and Gas

AMEX:NOG Past and Future Earnings May 1st 2020
AMEX:NOG Past and Future Earnings May 1st 2020

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Northern Oil and Gas' past performance and to peers in the same industry. These estimates imply that sales are expected to slow, with a forecast revenue decline of 18%, a significant reduction from annual growth of 19% over the last five years. Yet aggregate analyst estimates for other companies in the industry suggest that industry revenues are forecast to decline 1.2% next year. The forecasts do look bearish for Northern Oil and Gas, since they're expecting it to shrink faster than the industry.

The Bottom Line

The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for Northern Oil and Gas. Unfortunately they also downgraded their revenue estimates, and our aggregation of analyst estimates suggests that Northern Oil and Gas revenue is expected to perform worse than the wider market. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on Northern Oil and Gas after today.

As you can see, the analysts clearly aren't bullish, and there might be good reason for that. We've identified some potential issues with Northern Oil and Gas' financials, such as major dilution from new stock issuance in the past year. For more information, you can click here to discover this and the 2 other concerns we've identified.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.