Yahoo Finance CA$4.27 - That's What Analysts Think Birchcliff Energy Ltd. (TSE:BIR) Is Worth After These Results
A week ago, Birchcliff Energy Ltd. (TSE:BIR) came out with a strong set of yearly numbers that could potentially lead to a re-rate of the stock. Results overall were solid, with revenues arriving 5.7% better than analyst forecasts at CA$524m. Higher revenues also resulted in substantially lower statutory losses which, at CA$0.23 per share, were 5.7% smaller than the analysts expected. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
View our latest analysis for Birchcliff Energy
Taking into account the latest results, the most recent consensus for Birchcliff Energy from four analysts is for revenues of CA$711.2m in 2021 which, if met, would be a huge 36% increase on its sales over the past 12 months. Birchcliff Energy is also expected to turn profitable, with statutory earnings of CA$0.46 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of CA$699.4m and earnings per share (EPS) of CA$0.45 in 2021. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.
The analysts have been lifting their price targets on the back of the earnings upgrade, with the consensus price target rising 7.9% to CA$4.27. 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. There are some variant perceptions on Birchcliff Energy, with the most bullish analyst valuing it at CA$5.00 and the most bearish at CA$3.60 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's clear from the latest estimates that Birchcliff Energy's rate of growth is expected to accelerate meaningfully, with the forecast 36% annualised revenue growth to the end of 2021 noticeably faster than its historical growth of 13% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 11% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Birchcliff Energy is expected to grow much faster than its industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Birchcliff Energy following these results. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
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 Birchcliff Energy going out to 2022, and you can see them free on our platform here.
However, before you get too enthused, we've discovered 3 warning signs for Birchcliff Energy (1 can't be ignored!) that you should be aware of.
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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