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Woodside Petroleum Ltd (ASX:WPL) Just Released Its Annual Earnings: Here's What Analysts Think

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Simply Wall St
·4 min read
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Last week, you might have seen that Woodside Petroleum Ltd (ASX:WPL) released its yearly result to the market. The early response was not positive, with shares down 3.9% to AU$24.00 in the past week. Revenues of US$3.6b were in line with expectations, although statutory losses per share were US$4.22, some 16% smaller than was expected. 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've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

View our latest analysis for Woodside Petroleum

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Taking into account the latest results, the most recent consensus for Woodside Petroleum from twelve analysts is for revenues of US$4.28b in 2021 which, if met, would be a meaningful 19% increase on its sales over the past 12 months. Woodside Petroleum is also expected to turn profitable, with statutory earnings of US$0.93 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$4.19b and earnings per share (EPS) of US$0.81 in 2021. There's been a pretty noticeable increase in sentiment, with the analysts upgrading revenues and making a decent improvement in earnings per share in particular.

Althoughthe analysts have upgraded their earnings estimates, there was no change to the consensus price target of AU$27.84, suggesting that the forecast performance does not have a long term impact on the company's valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Woodside Petroleum analyst has a price target of AU$40.00 per share, while the most pessimistic values it at AU$21.30. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's clear from the latest estimates that Woodside Petroleum's rate of growth is expected to accelerate meaningfully, with the forecast 19% revenue growth noticeably faster than its historical growth of 0.5%p.a. 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 7.4% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Woodside Petroleum to grow faster than the wider industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Woodside Petroleum's earnings potential next year. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. The consensus price target held steady at US$27.84, 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. We have estimates - from multiple Woodside Petroleum analysts - going out to 2024, and you can see them free on our platform here.

Even so, be aware that Woodside Petroleum is showing 2 warning signs in our investment analysis , and 1 of those doesn't sit too well with us...

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.