The quarterly results for Trican Well Service Ltd. (TSE:TCW) were released last week, making it a good time to revisit its performance. It was a pretty bad result overall; while revenues were in line with expectations at CA$193m, statutory losses exploded to CA$0.58 per share. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Trican Well Service after the latest results.
After the latest results, the consensus from Trican Well Service's eleven analysts is for revenues of CA$364.4m in 2020, which would reflect a sizeable 38% decline in sales compared to the last year of performance. Per-share losses are supposed to see a sharp uptick, reaching CA$0.89. Yet prior to the latest earnings, the analysts had been forecasting revenues of CA$421.3m and losses of CA$0.28 per share in 2020. There's been a definite change in sentiment in this update, with the analysts administering a notable cut to next year's revenue estimates, while at the same time increasing their loss per share forecasts.
The average price target was broadly unchanged at CA$0.82, 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. There are some variant perceptions on Trican Well Service, with the most bullish analyst valuing it at CA$1.00 and the most bearish at CA$0.60 per share. 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.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. Compare this against analyst estimates for companies in the wider industry, which suggest that revenues (in aggregate) are expected to decline 3.4% next year. While this is interesting, Trican Well Service's, revenues are still expected to shrink next year, and at a faster rate than the wider industry.
The Bottom Line
The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Trican Well Service. Unfortunately they also cut their revenue estimates for next year, and forecasts imply the business' revenues are expected to perform worse than the wider industry. That said, earnings per share are more important for creating value for shareholders. The consensus price target held steady at CA$0.82, with the latest estimates not enough to have an impact on their price targets.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Trican Well Service going out to 2022, and you can see them free on our platform here..
However, before you get too enthused, we've discovered 2 warning signs for Trican Well Service that you should be aware of.
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