Yahoo Finance Party Time: Brokers Just Made Major Increases To Their Matador Resources Company (NYSE:MTDR) Earnings Forecasts
Celebrations may be in order for Matador Resources Company (NYSE:MTDR) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with analysts modelling a real improvement in business performance.
Following the upgrade, the consensus from five analysts covering Matador Resources is for revenues of US$3.0b in 2023, implying a discernible 5.6% decline in sales compared to the last 12 months. Per-share earnings are expected to increase 3.4% to US$10.55. Previously, the analysts had been modelling revenues of US$2.5b and earnings per share (EPS) of US$8.55 in 2023. So we can see there's been a pretty clear increase in analyst sentiment in recent times, with both revenues and earnings per share receiving a decent lift in the latest estimates.
Check out our latest analysis for Matador Resources
Although the analysts have upgraded their earnings estimates, there was no change to the consensus price target of US$73.69, suggesting that the forecast performance does not have a long term impact on the company's valuation. 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 Matador Resources, with the most bullish analyst valuing it at US$94.00 and the most bearish at US$65.00 per share. This shows there is still some diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 5.6% by the end of 2023. This indicates a significant reduction from annual growth of 33% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue decline 5.8% annually for the foreseeable future.
The Bottom Line
The most important thing to take away from this upgrade is that analysts upgraded their earnings per share estimates for this year, expecting improving business conditions. Fortunately they also upgraded their revenue estimates, and expect the business to perform in line with the wider market. The lack of change in the price target is puzzling, but with a serious upgrade to this year's earnings expectations, it might be time to take another look at Matador Resources.
Using these estimates as a starting point, we've run a discounted cash flow calculation (DCF) on Matador Resources that suggests the company could be somewhat undervalued. You can learn more about our valuation methodology on our platform here.
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks 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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