Yahoo Finance Analysts Have Been Trimming Their High Arctic Energy Services Inc Price Target After Its Latest Report
Shareholders in High Arctic Energy Services Inc (TSE:HWO) had a terrible week, as shares crashed 39% to CA$0.78 in the week since its latest annual results. The results look positive overall; while revenues of CA$186m were in line with analyst predictions, statutory losses were 2.9% smaller than expected, with High Arctic Energy Services losing CA$0.18 per share. This is an important time for investors, as they can track a company's performance in its report, look at what top analysts are forecasting for next year, and see if there has been any change to expectations for the business. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
View our latest analysis for High Arctic Energy Services
After the latest results, the three analysts covering High Arctic Energy Services are now predicting revenues of CA$190.3m in 2020. If met, this would reflect a satisfactory 2.6% improvement in sales compared to the last 12 months. Statutory losses are forecast to balloon 78% to CA$0.04 per share. Before this earnings report, analysts had been forecasting revenues of CA$195.0m and earnings per share (EPS) of CA$0.29 in 2020. Analysts have made an abrupt about-face on High Arctic Energy Services, administering a a minor downgrade to to revenue forecasts and slashing earnings forecasts from profit to loss.
The average analyst price target fell 18% to CA$2.35, implicitly signalling that lower earnings per share are a leading indicator for High Arctic Energy Services's valuation. 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 High Arctic Energy Services analyst has a price target of CA$3.40 per share, while the most pessimistic values it at CA$1.50. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
In addition, we can look to High Arctic Energy Services's past performance and see whether business is expected to improve, and if the company is expected to perform better than wider market. Analysts are definitely expecting High Arctic Energy Services's growth to accelerate, with the forecast 2.6% growth ranking favourably alongside historical growth of 0.6% per annum over the past five years. Compare this with other companies in the same market, which are forecast to see a revenue decline of 2.6% next year. So it's clear with the acceleration in growth, High Arctic Energy Services is expected to grow meaningfully faster than the wider market.
The Bottom Line
The biggest low-light for us was that the forecasts for High Arctic Energy Services dropped from profits to a loss next year. Unfortunately they also cut their revenue estimates for next year, although at least they still expect the business to grow faster than the wider market. That said, earnings per share are more important for creating value for shareholders. Analysts also downgraded their price target, suggesting that the latest news has led analysts to become more pessimistic about the intrinsic value of the business.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for High Arctic Energy Services going out to 2022, and you can see them 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.
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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