Tidewater Renewables Ltd. Beat Analyst Profit Forecasts, And Analysts Have New Estimates
Investors in Tidewater Renewables Ltd. (TSE:LCFS) had a good week, as its shares rose 4.9% to close at CA$8.73 following the release of its second-quarter results. Revenues of CA$13m missed forecasts by 12%, but despite this Tidewater Renewables reported a surprise statutory profit instead of the losses that the analysts had expected. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
View our latest analysis for Tidewater Renewables
Taking into account the latest results, the current consensus from Tidewater Renewables' six analysts is for revenues of CA$145.0m in 2023. This would reflect a substantial 101% increase on its revenue over the past 12 months. Per-share statutory losses are expected to explode, reaching CA$0.22 per share. Before this earnings report, the analysts had been forecasting revenues of CA$199.0m and earnings per share (EPS) of CA$0.0017 in 2023. There looks to have been a major change in sentiment regarding Tidewater Renewables' prospects following the latest results, with a pretty serious reduction to revenues and the analysts now forecasting a loss instead of a profit.
The average price target was broadly unchanged at CA$15.19, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation. 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. Currently, the most bullish analyst values Tidewater Renewables at CA$17.50 per share, while the most bearish prices it at CA$10.75. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
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 Tidewater Renewables' growth to accelerate, with the forecast 3x annualised growth to the end of 2023 ranking favourably alongside historical growth of 6.0% per annum over the past year. Compare this with other companies in the same industry, which are forecast to grow their revenue 2.6% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Tidewater Renewables is expected to grow much faster than its industry.
The Bottom Line
The biggest low-light for us was that the forecasts for Tidewater Renewables dropped from profits to a loss next year. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will 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.
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 estimates - from multiple Tidewater Renewables analysts - going out to 2025, and you can see them free on our platform here.
However, before you get too enthused, we've discovered 1 warning sign for Tidewater Renewables that you should be aware of.
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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.
