Yahoo Finance Earnings Miss: Subsea 7 S.A. Missed EPS And Analysts Are Revising Their Forecasts
It's been a mediocre week for Subsea 7 S.A. (OB:SUBC) shareholders, with the stock dropping 17% to kr81.74 in the week since its latest annual results. Revenues fell 3.1% short of expectations, at US$3.7b. Earnings correspondingly dipped, with Subsea 7 reporting a statutory loss of US$0.27 per share, whereas analysts had previously modelled a profit in this period. Analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. With this in mind, we've gathered the latest statutory forecasts to see what analysts are expecting for next year.
View our latest analysis for Subsea 7
Taking into account the latest results, the most recent consensus for Subsea 7 from 20 analysts is for revenues of US$4.12b in 2020, which is a decent 13% increase on its sales over the past 12 months. Subsea 7 is also expected to turn profitable, with statutory earnings of US$0.43 per share. In the lead-up to this report, analysts had been modelling revenues of US$4.16b and earnings per share (EPS) of US$0.44 in 2020. So it's pretty clear that, although analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
It will come as no surprise then, to learn that the consensus price target is largely unchanged at US$13.11. 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. There are some variant perceptions on Subsea 7, with the most bullish analyst valuing it at US$17.07 and the most bearish at US$8.36 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
Zooming out to look at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up both against past performance, and against industry growth estimates. For example, we noticed that Subsea 7's rate of growth is expected to accelerate meaningfully, with revenues forecast to grow at 13%, well above its historical decline of 9.7% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the market are forecast to see their revenue grow 8.8% per year. So it looks like Subsea 7 is expected to grow faster than its competitors, at least for a while.
The Bottom Line
The most obvious conclusion from these results is that there's been no major change in the business' prospects in recent times, with analysts holding earnings per share steady, in line with previous estimates. Happily, there were no major changes to revenue forecasts, with analysts still expecting the business to grow faster than the wider market. The consensus price target held steady at US$13.11, with the latest estimates not enough to have an impact on analysts' estimated valuations.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Subsea 7 going out to 2024, and you can see them free on our platform here.
You can also see our analysis of Subsea 7's Board and CEO remuneration and experience, and whether company insiders have been buying stock.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.
