Today is shaping up negative for CONSOL Energy Inc. (NYSE:CEIX) shareholders, with the analysts delivering a substantial negative revision to this year’s forecasts. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon. At US$5.63, shares are up 5.2% in the past 7 days. We’d be curious to see if the downgrade is enough to reverse investor sentiment on the business.
Following the latest downgrade, the current consensus, from the twin analysts covering CONSOL Energy, is for revenues of US$1.0b in 2020, which would reflect a concerning 24% reduction in CONSOL Energy’s sales over the past 12 months. Following this this downgrade, earnings are now expected to tip over into loss-making territory, with the analysts forecasting losses of US$0.65 per share in 2020. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$1.2b and losses of US$0.94 per share in 2020. We can see there’s definitely been a change in sentiment in this update, with the analysts administering a meaningful downgrade to this year’s revenue estimates, while at the same time reducing their loss estimates.
The consensus price target fell 26% to US$7.67, with the dip in revenue estimates clearly souring analyst sentiment, despite the forecast reduction in losses. 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 CONSOL Energy analyst has a price target of US$11.00 per share, while the most pessimistic values it at US$10.00. Still, with such a tight range of estimates, it suggests the analysts have a pretty good idea of what they think the company is worth.
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 24% revenue decline a notable change from historical growth of 2.1% over the last three years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 7.8% annually for the foreseeable future. It’s pretty clear that CONSOL Energy’s revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that CONSOL Energy’s revenues are expected to grow slower than the wider market. After such a stark change in sentiment from analysts, we’d understand if readers now felt a bit wary of CONSOL Energy.
That said, the analysts might have good reason to be negative on CONSOL Energy, given its declining profit margins. Learn more, and discover the 3 other concerns we’ve identified, for free on our platform here.
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
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