Yahoo Finance Smart Sand, Inc. (NASDAQ:SND) Analysts Are Reducing Their Forecasts For This Year
Market forces rained on the parade of Smart Sand, Inc. (NASDAQ:SND) shareholders today, when the analysts downgraded their forecasts for this year. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analysts have soured majorly on the business.
Following the latest downgrade, the four analysts covering Smart Sand provided consensus estimates of US$152m revenue in 2020, which would reflect a sizeable 35% decline on its sales over the past 12 months. After this downgrade, the company is anticipated to report a loss of US$0.18 in 2020, a sharp decline from a profit over the last year. Before this latest update, the analysts had been forecasting revenues of US$202m and earnings per share (EPS) of US$0.09 in 2020. So we can see that the consensus has become notably more bearish on Smart Sand's outlook with these numbers, making a sizeable cut to this year's revenue estimates. Furthermore, they expect the business to be loss-making this year, compared to their previous forecasts of a profit.
See our latest analysis for Smart Sand
The consensus price target fell 28% to US$1.71, implicitly signalling that lower earnings per share are a leading indicator for Smart Sand'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 Smart Sand analyst has a price target of US$2.50 per share, while the most pessimistic values it at US$1.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying 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 revenue decline of 35%, a significant reduction from annual growth of 38% 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 3.0% annually for the foreseeable future. The forecasts do look bearish for Smart Sand, since they're expecting it to shrink faster than the industry.
The Bottom Line
The biggest low-light for us was that the forecasts for Smart Sand dropped from profits to a loss this year. Unfortunately they also downgraded their revenue estimates, and our aggregation of analyst estimates suggests that Smart Sand revenue is expected to perform worse than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of Smart Sand.
Still, 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.
Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.
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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