Stock Analysis

Industry Analysts Just Upgraded Their Woodside Petroleum Ltd (ASX:WPL) Revenue Forecasts By 10%

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ASX:WDS
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Shareholders in Woodside Petroleum Ltd (ASX:WPL) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. The consensus estimated revenue numbers rose, with their view now clearly much more bullish on the company's business prospects.

After this upgrade, Woodside Petroleum's ten analysts are now forecasting revenues of US$8.4b in 2022. This would be a substantial 21% improvement in sales compared to the last 12 months. Before the latest update, the analysts were foreseeing US$7.7b of revenue in 2022. It looks like there's been a clear increase in optimism around Woodside Petroleum, given the solid increase in revenue forecasts.

Check out our latest analysis for Woodside Petroleum

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ASX:WPL Earnings and Revenue Growth May 7th 2022

There was no particular change to the consensus price target of US$24.38, with Woodside Petroleum's latest outlook seemingly not enough to result in a change of valuation. 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. Currently, the most bullish analyst values Woodside Petroleum at US$40.64 per share, while the most bearish prices it at US$29.99. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Woodside Petroleum shareholders.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's clear from the latest estimates that Woodside Petroleum's rate of growth is expected to accelerate meaningfully, with the forecast 29% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 4.4% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 3.1% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Woodside Petroleum to grow faster than the wider industry.

The Bottom Line

The highlight for us was that analysts increased their revenue forecasts for Woodside Petroleum this year. The analysts also expect revenues to grow faster than the wider market. Seeing the dramatic upgrade to this year's forecasts, it might be time to take another look at Woodside Petroleum.

Using these estimates as a starting point, we've run a discounted cash flow calculation (DCF) on Woodside Petroleum that suggests the company could be somewhat undervalued. You can learn more about our valuation methodology 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 upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

Valuation is complex, but we're helping make it simple.

Find out whether Woodside Energy Group is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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