Shareholders in Smart Sand, Inc. (NASDAQ:SND) may be thrilled to learn that the covering analyst has just delivered a major upgrade to their near-term forecasts. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with the analyst modelling a real improvement in business performance.
Following the upgrade, the current consensus from Smart Sand's solo analyst is for revenues of US$244m in 2022 which - if met - would reflect a substantial 36% increase on its sales over the past 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 70% to US$0.18. Yet before this consensus update, the analyst had been forecasting revenues of US$212m and losses of US$0.21 per share in 2022. We can see there's definitely been a change in sentiment in this update, with the analyst administering a sizeable upgrade to this year's revenue estimates, while at the same time reducing their loss estimates.
Yet despite these upgrades, the analyst cut their price target 13% to US$3.50, implicitly signalling that the ongoing losses are likely to weigh negatively on Smart Sand's valuation.
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. One thing stands out from these estimates, which is that Smart Sand is forecast to grow faster in the future than it has in the past, with revenues expected to display 84% annualised growth until the end of 2022. If achieved, this would be a much better result than the 3.1% annual decline over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 11% per year. Not only are Smart Sand's revenues expected to improve, it seems that the analyst is also expecting it to grow faster than the wider industry.
The Bottom Line
The highlight for us was that the consensus reduced its estimated losses this year, perhaps suggesting Smart Sand is moving incrementally towards profitability. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. A lower price target is not intuitively what we would expect from a company whose business prospects are improving - at least judging by these forecasts - but if the underlying fundamentals are strong, Smart Sand could be one for the watch list.
Still, the long-term prospects of the business are much more relevant than next year's earnings. We have analyst estimates for Smart Sand going out as far as 2023, and you can see them free on our platform here.
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.
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