Odfjell SE (OB:ODF) just released its full-year report and things are looking bullish. Odfjell beat expectations with revenues of US$872m arriving 2.1% ahead of forecasts. The company also reported a statutory loss of US$0.47, 8.7% smaller than was expected. This is an important time for investors, as they can track a company’s performance in its report, look at what top analysts 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 analysts have changed their mind on Odfjell after the latest results.
Taking into account the latest results, the current consensus from Odfjell’s five analysts is for revenues of US$987.3m in 2020, which would reflect a decent 13% increase on its sales over the past 12 months. Earnings are expected to improve, with Odfjell forecast to report a statutory profit of US$0.041 per share. Before this earnings report, analysts had been forecasting revenues of US$855.9m and earnings per share (EPS) of US$0.031 in 2020. There has definitely been an improvement in perception after these results, with analysts noticeably increasing both their earnings and revenue estimates.
Despite these upgrades, analysts have not made any major changes to their price target of US$4.32, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. 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 Odfjell at US$4.48 per share, while the most bearish prices it at US$4.09. The narrow spread of estimates could suggest that the business’ future is relatively easy to value, or that analysts have a clear view on its prospects.
It can be useful to take a broader overview by seeing how analyst forecasts compare, both to the Odfjell’s past performance and to peers in the same market. For example, we noticed that Odfjell’s rate of growth is expected to accelerate meaningfully, with revenues forecast to grow at 13%, well above its historical decline of 3.3% a year 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 7.6% next year. So it looks like Odfjell is expected to grow faster than its competitors, at least for a while.
The Bottom Line
The biggest takeaway for us from these new estimates is that the consensus upgraded its earnings per share estimates, showing a clear improvement in sentiment around Odfjell’s earnings potential next year. Fortunately, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider market. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that in mind, we wouldn’t be too quick to come to a conclusion on Odfjell. Long-term earnings power is much more important than next year’s profits. At Simply Wall St, we have a full range of analyst estimates for Odfjell going out to 2022, and you can see them free on our platform here..
It might also be worth considering whether Odfjell’s debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
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