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Shareholders of PetroTal Corp. (CVE:TAL) will be pleased this week, given that the stock price is up 20% to CA$0.30 following its latest full-year results. PetroTal's revenues suffered a miss, falling 22% short of forecasts, at US$59m. Statutory earnings per share (EPS) however performed much better, reaching break-even. 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.
Taking into account the latest results, the current consensus from PetroTal's four analysts is for revenues of US$224.1m in 2021, which would reflect a huge 281% increase on its sales over the past 12 months. Earnings are expected to improve, with PetroTal forecast to report a statutory profit of US$0.18 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$224.6m and earnings per share (EPS) of US$0.10 in 2021. Although the revenue estimates have not really changed, we can see there's been a considerable lift to earnings per share expectations, suggesting that the analysts have become more bullish after the latest result.
There's been no major changes to the consensus price target of CA$0.73, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic PetroTal analyst has a price target of CA$0.75 per share, while the most pessimistic values it at CA$0.71. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.
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. For example, we noticed that PetroTal's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 281% growth to the end of 2021 on an annualised basis. That is well above its historical decline of 20% a year over the past year. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 12% per year. So it looks like PetroTal is expected to grow faster than its competitors, at least for a while.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around PetroTal's earnings potential next year. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. The consensus price target held steady at US$0.73, with the latest estimates not enough to have an impact on their price targets.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for PetroTal going out to 2024, and you can see them free on our platform here.
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with PetroTal , and understanding it should be part of your investment process.
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. 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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