It's been a good week for Gibson Energy Inc. (TSE:GEI) shareholders, because the company has just released its latest first-quarter results, and the shares gained 2.6% to CA$20.34. Sales fell badly short of expectations, with revenues of CA$1.5b missing analyst targets by 23%. Statutory earnings per share (EPS) of CA$0.34 were a bright spot though, beating analyst predictions by 14%. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Gibson Energy after the latest results.
After the latest results, the consensus from Gibson Energy's ten analysts is for revenues of CA$6.32b in 2020, which would reflect a considerable 10% decline in sales compared to the last year of performance. Statutory earnings per share are expected to plummet 24% to CA$0.88 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of CA$6.13b and earnings per share (EPS) of CA$0.90 in 2020. So it's pretty clear consensus is mixed on Gibson Energy after the latest results; whilethe analysts lifted revenue numbers, they also administered a minor downgrade to per-share earnings expectations.
The consensus price target was unchanged at CA$23.00, suggesting the business is performing roughly in line with expectations, despite some adjustments to profit and revenue forecasts. 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. The most optimistic Gibson Energy analyst has a price target of CA$27.00 per share, while the most pessimistic values it at CA$18.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Gibson Energy shareholders.
Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that sales are expected to reverse, with the forecast 10% revenue decline a notable change from historical growth of 4.5% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 0.8% next year. It's pretty clear that Gibson Energy's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. They also upgraded their revenue estimates for next year, even though sales are expected to grow slower than the wider industry. The consensus price target held steady at CA$23.00, 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 estimates - from multiple Gibson Energy analysts - going out to 2021, and you can see them free on our platform here.
We don't want to rain on the parade too much, but we did also find 3 warning signs for Gibson Energy (1 is significant!) that you need to be mindful of.
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