Yahoo Finance Range Resources Corporation (NYSE:RRC) Analysts Just Cut Their EPS Forecasts Substantially
The latest analyst coverage could presage a bad day for Range Resources Corporation (NYSE:RRC), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Both revenue and earnings per share (EPS) estimates were cut sharply as the analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.
Following the latest downgrade, the 15 analysts covering Range Resources provided consensus estimates of US$2.8b revenue in 2023, which would reflect a sizeable 47% decline on its sales over the past 12 months. Statutory earnings per share are anticipated to crater 42% to US$2.80 in the same period. Prior to this update, the analysts had been forecasting revenues of US$3.3b and earnings per share (EPS) of US$3.63 in 2023. Indeed, we can see that the analysts are a lot more bearish about Range Resources' prospects, administering a substantial drop in revenue estimates and slashing their EPS estimates to boot.
Check out our latest analysis for Range Resources
Despite the cuts to forecast earnings, there was no real change to the US$31.70 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Range Resources analyst has a price target of US$48.00 per share, while the most pessimistic values it at US$20.00. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.
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 47% by the end of 2023. This indicates a significant reduction from annual growth of 8.8% 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 6.3% annually for the foreseeable future. So it's pretty clear that Range Resources' revenues are expected to shrink faster than the wider industry.
The Bottom Line
The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for Range Resources. Unfortunately they also downgraded their revenue estimates, and our aggregation of analyst estimates suggests that Range Resources revenue is expected to perform worse than the wider market. The lack of change in the price target is puzzling in light of the downgrade but, with a serious decline expected this year, we wouldn't be surprised if investors were a bit wary of Range Resources.
As you can see, the analysts clearly aren't bullish, and there might be good reason for that. We've identified some potential issues with Range Resources' financials, such as a weak balance sheet. Learn more, and discover the 1 other warning sign we've identified, for free on our platform here.
Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.
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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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