Time To Worry? Analysts Just Downgraded Their Secure Energy Services Inc. (TSE:SES) Outlook
One thing we could say about the analysts on Secure Energy Services Inc. (TSE:SES) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative. The stock price has risen 7.7% to CA$8.67 over the past week. We'd be curious to see if the downgrade is enough to reverse investor sentiment on the business.
Following the downgrade, the consensus from four analysts covering Secure Energy Services is for revenues of CA$1.3b in 2024, implying a painful 83% decline in sales compared to the last 12 months. Prior to the latest estimates, the analysts were forecasting revenues of CA$1.7b in 2024. The consensus view seems to have become more pessimistic on Secure Energy Services, noting the measurable cut to revenue estimates in this update.
View our latest analysis for Secure Energy Services
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Secure Energy Services' past performance and to peers in the same industry. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 76% by the end of 2024. This indicates a significant reduction from annual growth of 28% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue decline 12% annually for the foreseeable future. So it's pretty clear that Secure Energy Services' revenues are expected to shrink faster than the wider industry.
The Bottom Line
The clear low-light was that analysts slashing their revenue forecasts for Secure Energy Services next year. Analysts also expect revenues to shrink faster than the wider market. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on Secure Energy Services after today.
Unfortunately, the earnings downgrade - if accurate - may also place pressure on Secure Energy Services' mountain of debt, which could lead to some belt tightening for shareholders. See why we're concerned about Secure Energy Services' balance sheet by visiting our risks dashboard for free on our platform here.
Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.
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