Karoon Energy Ltd (ASX:KAR) Just Released Its Full-Year Earnings: Here's What Analysts Think

Karoon Energy Ltd (ASX:KAR) came out with its annual results last week, and we wanted to see how the business is performing and what industry forecasters think of the company following this report. Results look mixed - while revenue fell marginally short of analyst estimates at US$567m, statutory earnings beat expectations 2.2%, with Karoon Energy reporting profits of US$0.30 per share. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

View our latest analysis for Karoon Energy

Taking into account the latest results, the current consensus from Karoon Energy's ten analysts is for revenues of US$750.0m in 2024. This would reflect a substantial 32% increase on its revenue over the past 12 months. Per-share earnings are expected to surge 41% to US$0.41. Before this earnings report, the analysts had been forecasting revenues of US$738.2m and earnings per share (EPS) of US$0.39 in 2024. So the consensus seems to have become somewhat more optimistic on Karoon Energy's earnings potential following these results.

There's been no major changes to the consensus price target of AU$2.77, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. 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 Karoon Energy analyst has a price target of AU$3.64 per share, while the most pessimistic values it at AU$2.48. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Karoon Energy's past performance and to peers in the same industry. We would highlight that Karoon Energy's revenue growth is expected to slow, with the forecast 32% annualised growth rate until the end of 2024 being well below the historical 71% p.a. growth over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue shrink 1.9% per year. Factoring in the forecast slowdown in growth, it's pretty clear that Karoon Energy is still expected to grow faster than the wider industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Karoon Energy following these results. Fortunately, they also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Their estimates also suggest that Karoon Energy's revenue is expected to perform better than the wider industry. 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.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Karoon Energy analysts - going out to 2026, and you can see them free on our platform here.

And what about risks? Every company has them, and we've spotted 2 warning signs for Karoon Energy you should know about.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.