VAALCO Energy, Inc. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Predictions
A week ago, VAALCO Energy, Inc. (NYSE:EGY) came out with a strong set of yearly numbers that could potentially lead to a re-rate of the stock. It was overall a positive result, with revenues beating expectations by 5.0% to hit US$455m. VAALCO Energy also reported a statutory profit of US$0.56, which was an impressive 35% above what the analysts had forecast. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
See our latest analysis for VAALCO Energy
Taking into account the latest results, the current consensus, from the four analysts covering VAALCO Energy, is for revenues of US$417.3m in 2024. This implies a not inconsiderable 8.3% reduction in VAALCO Energy's revenue over the past 12 months. Per-share earnings are expected to surge 55% to US$0.90. Before this earnings report, the analysts had been forecasting revenues of US$410.8m and earnings per share (EPS) of US$0.81 in 2024. There was no real change to the revenue estimates, but the analysts do seem more bullish on earnings, given the nice increase in earnings per share expectations following these results.
The consensus price target was unchanged at US$8.75, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. 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. The most optimistic VAALCO Energy analyst has a price target of US$10.00 per share, while the most pessimistic values it at US$7.25. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that revenue is expected to reverse, with a forecast 8.3% annualised decline to the end of 2024. That is a notable change from historical growth of 39% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 1.7% annually for the foreseeable future. It's pretty clear that VAALCO Energy's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards VAALCO Energy following these results. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that VAALCO Energy's revenue is expected to perform worse than the wider industry. The consensus price target held steady at US$8.75, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn't be too quick to come to a conclusion on VAALCO Energy. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple VAALCO Energy analysts - going out to 2026, and you can see them free on our platform here.
Plus, you should also learn about the 1 warning sign we've spotted with VAALCO Energy .
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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.
