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Last week saw the newest quarterly earnings release from PBF Energy Inc. (NYSE:PBF), an important milestone in the company's journey to build a stronger business. It was a solid earnings report, with revenues and earnings both coming in very strong. Revenues were 12% higher than the analysts had forecast, at US$6.9b, while the company also delivered a surprise statutory profit, against analyst expectations of a loss. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on PBF Energy after the latest results.
After the latest results, the nine analysts covering PBF Energy are now predicting revenues of US$24.4b in 2021. If met, this would reflect a huge 27% improvement in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 33% to US$3.99. Before this latest report, the consensus had been expecting revenues of US$24.1b and US$3.89 per share in losses. Overall it looks as though the analysts were a bit mixed on the latest consensus updates. Although sales forecasts held steady, the consensus also made a pronounced increase to its losses per share forecasts.
With the increase in forecast losses for next year, it's perhaps no surprise to see that the average price target dipped 16% to US$10.65, with the analysts signalling that growing losses would be a definite concern. 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. There are some variant perceptions on PBF Energy, with the most bullish analyst valuing it at US$20.00 and the most bearish at US$4.00 per share. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how analysts think this business will perform. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the PBF Energy's past performance and to peers in the same industry. The analysts are definitely expecting PBF Energy's growth to accelerate, with the forecast 62% annualised growth to the end of 2021 ranking favourably alongside historical growth of 2.5% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 2.3% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that PBF Energy is expected to grow much faster than its industry.
The Bottom Line
The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at PBF Energy. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of PBF Energy's future valuation.
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 PBF Energy analysts - going out to 2023, and you can see them free on our platform here.
Don't forget that there may still be risks. For instance, we've identified 2 warning signs for PBF Energy that you should be aware 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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