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Shareholders of Penn Virginia Corporation (NASDAQ:PVAC) will be pleased this week, given that the stock price is up 15% to US$18.05 following its latest yearly results. Revenues missed expectations, with sales of US$273m falling 11% short of forecasts. Earnings correspondingly dipped, with Penn Virginia reporting a statutory loss of US$8.92 per share, where the analysts were expecting a profit. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Penn Virginia after the latest results.
Taking into account the latest results, the most recent consensus for Penn Virginia from twin analysts is for revenues of US$394.8m in 2021 which, if met, would be a substantial 44% increase on its sales over the past 12 months. Penn Virginia is also expected to turn profitable, with statutory earnings of US$3.51 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$335.6m and earnings per share (EPS) of US$2.04 in 2021. There has definitely been an improvement in perception after these results, with the analysts noticeably increasing both their earnings and revenue estimates.
It will come as no surprise to learn that the analysts have increased their price target for Penn Virginia 15% to US$18.60on the back of these upgrades.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. The analysts are definitely expecting Penn Virginia's growth to accelerate, with the forecast 44% annualised growth to the end of 2021 ranking favourably alongside historical growth of 21% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 9.0% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Penn Virginia to grow faster than the wider industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Penn Virginia's earnings potential next year. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At least one analyst has provided forecasts out to 2022, which can be seen for free on our platform here.
Don't forget that there may still be risks. For instance, we've identified 2 warning signs for Penn Virginia (1 doesn't sit too well with us) 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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