3R Petroleum Óleo e Gás S.A. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Predictions

A week ago, 3R Petroleum Óleo e Gás S.A. (BVMF:RRRP3) came out with a strong set of full-year numbers that could potentially lead to a re-rate of the stock. It was overall a positive result, with revenues beating expectations by 9.7% to hit R$5.6b. 3R Petroleum Óleo e Gás also reported a statutory profit of R$1.78, which was an impressive 51% above what the analysts had forecast. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

Check out our latest analysis for 3R Petroleum Óleo e Gás

Following the latest results, 3R Petroleum Óleo e Gás' seven analysts are now forecasting revenues of R$8.53b in 2024. This would be a sizeable 52% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to jump 456% to R$9.38. Yet prior to the latest earnings, the analysts had been anticipated revenues of R$8.67b and earnings per share (EPS) of R$7.98 in 2024. There was no real change to the revenue estimates, but the analysts do seem more bullish on earnings, given the substantial gain in earnings per share expectations following these results.

The consensus price target was unchanged at R$55.04, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. 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. There are some variant perceptions on 3R Petroleum Óleo e Gás, with the most bullish analyst valuing it at R$86.00 and the most bearish at R$28.50 per share. With such a wide range in price targets, analysts are almost certainly betting on widely divergent outcomes in the underlying business. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's pretty clear that there is an expectation that 3R Petroleum Óleo e Gás' revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 52% growth on an annualised basis. This is compared to a historical growth rate of 74% over the past five years. Compare this with other companies in the same industry, which are forecast to see a revenue decline of 1.1% annually. Factoring in the forecast slowdown in growth, it's pretty clear that 3R Petroleum Óleo e Gás 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 3R Petroleum Óleo e Gás following these results. On the plus side, they made no changes to their revenue estimates - and they expect it 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.

With that in mind, we wouldn't be too quick to come to a conclusion on 3R Petroleum Óleo e Gás. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple 3R Petroleum Óleo e Gás 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 3 warning signs for 3R Petroleum Óleo e Gás (of which 2 make us uncomfortable!) 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.