Results: Earthstone Energy, Inc. Delivered A Surprise Loss And Now Analysts Have New Forecasts
Shareholders will be ecstatic, with their stake up 36% over the past week following Earthstone Energy, Inc.'s (NYSE:ESTE) latest quarterly results. Revenues came in 32% better than analyst models predicted, at US$76m. The company was unable to deliver a profit however, with statutory losses of US$0.14 well below the profits that the analysts had forecast. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Check out our latest analysis for Earthstone Energy
Taking into account the latest results, the consensus forecast from Earthstone Energy's four analysts is for revenues of US$279.0m in 2021, which would reflect a substantial 59% improvement in sales compared to the last 12 months. Earnings are expected to improve, with Earthstone Energy forecast to report a statutory profit of US$0.34 per share. In the lead-up to this report, the analysts had been modelling revenues of US$259.6m and earnings per share (EPS) of US$0.14 in 2021. There's been a pretty noticeable increase in sentiment, with the analysts upgrading revenues and making a considerable lift to earnings per share in particular.
Althoughthe analysts have upgraded their earnings estimates, there was no change to the consensus price target of US$10.06, suggesting that the forecast performance does not have a long term impact on the company's valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Earthstone Energy at US$12.50 per share, while the most bearish prices it at US$4.50. 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. The analysts are definitely expecting Earthstone Energy's growth to accelerate, with the forecast 86% annualised growth to the end of 2021 ranking favourably alongside historical growth of 28% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 4.2% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Earthstone Energy is expected to grow much faster than its industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Earthstone Energy's earnings potential next year. Happily, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that in mind, we wouldn't be too quick to come to a conclusion on Earthstone Energy. Long-term earnings power is much more important than next year's profits. We have forecasts for Earthstone Energy going out to 2023, and you can see them free on our platform here.
Even so, be aware that Earthstone Energy is showing 3 warning signs in our investment analysis , you should know about...
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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