The latest analyst coverage could presage a bad day for Schoeller-Bleckmann Oilfield Equipment Aktiengesellschaft (VIE:SBO), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon. Bidders are definitely seeing a different story, with the stock price of €29.55 reflecting a 29% rise in the past week. It will be interesting to see if the downgrade has an impact on buying demand for the company’s shares.
Following the latest downgrade, the current consensus, from the nine analysts covering Schoeller-Bleckmann Oilfield Equipment, is for revenues of €396m in 2020, which would reflect an uncomfortable 11% reduction in Schoeller-Bleckmann Oilfield Equipment’s sales over the past 12 months. Statutory earnings per share are supposed to dive 27% to €1.48 in the same period. Previously, the analysts had been modelling revenues of €447m and earnings per share (EPS) of €2.09 in 2020. Indeed, we can see that the analysts are a lot more bearish about Schoeller-Bleckmann Oilfield Equipment’s prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.
The consensus price target fell 15% to €51.94, with the weaker earnings outlook clearly leading analyst valuation estimates. 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 Schoeller-Bleckmann Oilfield Equipment analyst has a price target of €88.00 per share, while the most pessimistic values it at €17.00. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how think this business will perform. With this in mind, we wouldn’t rely too heavily on the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. These estimates imply that sales are expected to slow, with a forecast revenue decline of 11%, a significant reduction from annual growth of 4.1% 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 0.2% annually for the foreseeable future. So it’s pretty clear that Schoeller-Bleckmann Oilfield Equipment’s revenues are expected to shrink faster than the wider industry.
The Bottom Line
The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Unfortunately they also downgraded their revenue estimates, and our aggregation of analyst estimates suggests that Schoeller-Bleckmann Oilfield Equipment 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 Schoeller-Bleckmann Oilfield Equipment.
Unfortunately, the earnings downgrade – if accurate – may also place pressure on Schoeller-Bleckmann Oilfield Equipment’s mountain of debt, which could lead to some belt tightening for shareholders. You can learn more about our debt analysis for free on our platform here.
We also provide an overview of the Schoeller-Bleckmann Oilfield Equipment Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.
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