ProFrac Holding Corp. (NASDAQ:ACDC) Analysts Are Cutting Their Estimates: Here's What You Need To Know
It's been a good week for ProFrac Holding Corp. (NASDAQ:ACDC) shareholders, because the company has just released its latest quarterly results, and the shares gained 3.3% to US$10.50. Revenues were US$852m, with ProFrac Holding reporting some 3.5% below analyst expectations. 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.
See our latest analysis for ProFrac Holding
Taking into account the latest results, the most recent consensus for ProFrac Holding from five analysts is for revenues of US$3.43b in 2023 which, if met, would be a solid 17% increase on its sales over the past 12 months. Statutory earnings per share are predicted to surge 317% to US$2.46. Before this earnings report, the analysts had been forecasting revenues of US$3.69b and earnings per share (EPS) of US$4.51 in 2023. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a large cut to earnings per share estimates.
The consensus price target fell 8.9% to US$25.00, with the weaker earnings outlook clearly leading valuation estimates. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values ProFrac Holding at US$39.00 per share, while the most bearish prices it at US$12.00. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely different views on what kind of performance this business can generate. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.
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. We would highlight that ProFrac Holding's revenue growth is expected to slow, with the forecast 23% annualised growth rate until the end of 2023 being well below the historical 204% growth over the last year. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 8.4% annually. Even after the forecast slowdown in growth, it seems obvious that ProFrac Holding is also expected to grow faster than the wider industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for ProFrac Holding. They also downgraded their revenue estimates, although industry data suggests that ProFrac Holding's revenues are expected to grow faster than the wider industry. 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.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for ProFrac Holding going out to 2025, 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 ProFrac Holding that you should be aware of.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here
