Santos Limited (ASX:STO) Annual Results Just Came Out: Here's What Analysts Are Forecasting For This Year

Santos Limited (ASX:STO) last week reported its latest yearly results, which makes it a good time for investors to dive in and see if the business is performing in line with expectations. It looks like the results were a bit of a negative overall. While revenues of US$5.9b were in line with analyst predictions, statutory earnings were less than expected, missing estimates by 3.4% to hit US$0.43 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've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

See our latest analysis for Santos

Taking into account the latest results, the current consensus, from the 13 analysts covering Santos, is for revenues of US$5.42b in 2024. This implies a perceptible 7.9% reduction in Santos' revenue over the past 12 months. Statutory earnings per share are forecast to reduce 4.2% to US$0.42 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$5.42b and earnings per share (EPS) of US$0.42 in 2024. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.

It will come as no surprise then, to learn that the consensus price target is largely unchanged at AU$8.63. 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 Santos analyst has a price target of AU$12.32 per share, while the most pessimistic values it at AU$7.74. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for 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 revenue is expected to slow, with a forecast annualised decline of 7.9% by the end of 2024. This indicates a significant reduction from annual growth of 16% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 0.6% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Santos is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. The consensus price target held steady at AU$8.63, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on Santos. 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 Santos going out to 2026, and you can see them free on our platform here..

You should always think about risks though. Case in point, we've spotted 1 warning sign for Santos you should be aware of.

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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.