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Results: Smart Sand, Inc. Delivered A Surprise Loss And Now Analysts Have New Forecasts

Smart Sand, Inc. (NASDAQ:SND) shareholders are probably feeling a little disappointed, since its shares fell 7.4% to US$0.80 in the week after its latest first-quarter results. It was a pretty bad result overall, with revenues coming in 20% lower than the analysts predicted. Statutory earnings correspondingly nosedived, with Smart Sand reporting a loss of US$0.0021 per share, where the analysts were expecting a profit. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

See our latest analysis for Smart Sand

NasdaqGS:SND Past and Future Earnings May 11th 2020
NasdaqGS:SND Past and Future Earnings May 11th 2020

Following the recent earnings report, the consensus from four analysts covering Smart Sand is for revenues of US$123.5m in 2020, implying a stressful 46% decline in sales compared to the last 12 months. Earnings are expected to tip over into lossmaking territory, with the analysts forecasting statutory losses of -US$0.18 per share in 2020. Before this earnings announcement, the analysts had been modelling revenues of US$152.3m and losses of US$0.18 per share in 2020. So there's been quite a change-up of views after the recent consensus updates, withthe analysts making a serious cut to their revenue forecasts while also making no real change to the loss per share numbers.

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The analysts have cut their price target 28% to US$1.71 per share, signalling that the declining revenue and ongoing losses are contributing to the lower valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Smart Sand at US$2.50 per share, while the most bearish prices it at US$1.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

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. We would highlight that sales are expected to reverse, with the forecast 46% revenue decline a notable change from historical growth of 31% over the last three years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 0.05% next year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Smart Sand is expected to lag the wider industry.

The Bottom Line

The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Smart Sand's future valuation.

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 Smart Sand analysts - going out to 2022, and you can see them free on our platform here.

And what about risks? Every company has them, and we've spotted 5 warning signs for Smart Sand (of which 1 shouldn't be ignored!) you should know about.

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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.