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W&T Offshore, Inc. Just Beat EPS By 24%: Here's What Analysts Think Will Happen Next

One of the biggest stories of last week was how W&T Offshore, Inc. (NYSE:WTI) shares plunged 23% in the week since its latest yearly results, closing yesterday at US$2.00. Revenues were US$532m, approximately in line with what analysts expected, although statutory earnings per share (EPS) crushed expectations, coming in at US$0.52, an impressive 24% ahead of estimates. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether analysts have changed their mind on W&T Offshore after the latest results.

See our latest analysis for W&T Offshore

NYSE:WTI Past and Future Earnings, March 9th 2020
NYSE:WTI Past and Future Earnings, March 9th 2020

After the latest results, the two analysts covering W&T Offshore are now predicting revenues of US$545.9m in 2020. If met, this would reflect a satisfactory 2.5% improvement in sales compared to the last 12 months. Statutory earnings per share are forecast to plummet 48% to US$0.27 in the same period. In the lead-up to this report, analysts had been modelling revenues of US$618.8m and earnings per share (EPS) of US$0.13 in 2020. There's been a definite change in sentiment after these results, with analysts administering a to next year's revenue estimates, while at the same time substantially upgrading EPS. It's almost as though the business is forecast to reduce its focus on growth to enhance profitability.

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The consensus price target fell 15% to US$6.69, with analysts signalling that the weaker revenue outlook was a more powerful indicator than the upgraded EPS forecasts.

Another way to assess these estimates is by comparing them to past performance, and seeing whether analysts are more or less bullish relative to other companies in the market. One thing stands out from these estimates, which is that analysts are forecasting W&T Offshore to grow faster in the future than it has in the past, with revenues expected to grow 2.5%. If achieved, this would be a much better result than the 5.9% annual decline over the past five years. Compare this against analyst estimates for the wider market, which suggest that (in aggregate) market revenues are expected to grow 4.5% next year. So although W&T Offshore's revenue growth is expected to improve, it is still expected to grow slower than the market.

The Bottom Line

The most important thing to take away from this is that analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards W&T Offshore following these results. Unfortunately, analysts also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider market. Even so, earnings per share are more important to the intrinsic value of the business. Yet - earnings are more important to the intrinsic value of the business. 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. We have analyst estimates for W&T Offshore going out as far as 2021, and you can see them free on our platform here.

You can also view our analysis of W&T Offshore's balance sheet, and whether we think W&T Offshore is carrying too much debt, for free 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.

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.