Yahoo Finance New Forecasts: Here's What Analysts Think The Future Holds For MEG Energy Corp. (TSE:MEG)
MEG Energy Corp. (TSE:MEG) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. The analysts have sharply increased their revenue numbers, with a view that MEG Energy will make substantially more sales than they'd previously expected.
Following the upgrade, the latest consensus from MEG Energy's four analysts is for revenues of CA$5.5b in 2022, which would reflect a major 28% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to leap 160% to CA$2.40. Before this latest update, the analysts had been forecasting revenues of CA$4.8b and earnings per share (EPS) of CA$2.21 in 2022. Sentiment certainly seems to have improved in recent times, with a substantial gain in revenue and a slight bump in earnings per share estimates.
View our latest analysis for MEG Energy
With these upgrades, we're not surprised to see that the analysts have lifted their price target 7.3% to CA$20.07 per share. 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. There are some variant perceptions on MEG Energy, with the most bullish analyst valuing it at CA$26.00 and the most bearish at CA$13.00 per share. This is a fairly broad spread of estimates, suggesting that the 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 MEG Energy's rate of growth is expected to accelerate meaningfully, with the forecast 28% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 9.6% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 6.4% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that MEG Energy is expected to grow much faster than its industry.
The Bottom Line
The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for this year. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. There was also an increase in the price target, suggesting that there is more optimism baked into the forecasts than there was previously. Seeing the dramatic upgrade to this year's forecasts, it might be time to take another look at MEG Energy.
These earnings upgrades look like a sterling endorsement, but before diving in - you should know that we've spotted 3 potential risks with MEG Energy, including recent substantial insider selling. For more information, you can click through to our platform to learn more about this and the 2 other risks we've identified .
Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.
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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.
