Yahoo Finance Genel Energy plc Earnings Missed Analyst Estimates: Here's What Analysts Are Forecasting Now
Investors in Genel Energy plc (LON:GENL) had a good week, as its shares rose 4.8% to close at UK£0.84 following the release of its yearly results. It looks like a pretty bad result, all things considered. Although revenues of US$377m were in line with analyst predictions, statutory earnings fell badly short, missing estimates by 29% to hit US$0.37 per share. 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.
View our latest analysis for Genel Energy
After the latest results, the consensus from Genel Energy's six analysts is for revenues of US$268.5m in 2020, which would reflect a sizeable 29% decline in sales compared to the last year of performance. Statutory earnings per share are predicted to increase 6.9% to US$0.40. In the lead-up to this report, the analysts had been modelling revenues of US$351.3m and earnings per share (EPS) of US$0.45 in 2020. Indeed, we can see that the analysts are a lot more bearish about Genel Energy's prospects following the latest results, administering a pretty serious reduction to revenue estimates and slashing their EPS estimates to boot.
The consensus price target fell 15% to US$2.73, with the weaker earnings outlook clearly leading valuation estimates. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Genel Energy analyst has a price target of US$4.69 per share, while the most pessimistic values it at US$1.31. We would probably assign less value to the analyst forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.
Of course, another way to look at these forecasts is to place them into context against the industry itself. Over the past five years, revenues have declined around 5.5% annually. Worse, forecasts are essentially predicting the decline to accelerate, with the estimate for a 29% decline in revenue next year. Compare this against analyst estimates for companies in the wider industry, which suggest that revenues (in aggregate) are expected to grow 4.0% next year. So it's pretty clear that, while it does have declining revenues, the analysts also expect Genel Energy to suffer worse than the wider industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Genel Energy. Unfortunately, they also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Genel Energy's future valuation.
With that in mind, we wouldn't be too quick to come to a conclusion on Genel Energy. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Genel Energy going out to 2022, and you can see them free on our platform here..
Don't forget that there may still be risks. For instance, we've identified 2 warning signs for Genel Energy that you should be aware of.
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.
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