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The analysts covering Crew Energy Inc. (TSE:CR) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Both revenue and earnings per share (EPS) estimates were cut sharply as analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.
Following the downgrade, the current consensus from Crew Energy's four analysts is for revenues of CA$232m in 2021 which - if met - would reflect a credible 6.9% increase on its sales over the past 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 26% to CA$0.04. Previously, the analysts had been modelling revenues of CA$262m and earnings per share (EPS) of CA$0.13 in 2021. So we can see that the consensus has become notably more bearish on Crew Energy's outlook with these numbers, making a measurable cut to this year's revenue estimates. Furthermore, they expect the business to be loss-making this year, compared to their previous forecasts of a profit.
The consensus price target was broadly unchanged at CA$2.98, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Crew Energy at CA$4.00 per share, while the most bearish prices it at CA$2.00. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.
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. The analysts are definitely expecting Crew Energy's growth to accelerate, with the forecast 14% annualised growth to the end of 2021 ranking favourably alongside historical growth of 0.08% per annum 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 4.7% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Crew Energy to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that analysts are expecting Crew Energy to become unprofitable this year. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. The lack of change in the price target is puzzling in light of the downgrade but, with a serious decline expected this year, we wouldn't be surprised if investors were a bit wary of Crew Energy.
That said, the analysts might have good reason to be negative on Crew Energy, given recent substantial insider selling. For more information, you can click here to discover this and the 2 other concerns we've identified.
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
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.
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