Analysts Just Slashed Their 3R Petroleum Óleo e Gás S.A. (BVMF:RRRP3) EPS Numbers

The latest analyst coverage could presage a bad day for 3R Petroleum Óleo e Gás S.A. (BVMF:RRRP3), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analysts have soured majorly on the business. Shares are up 9.8% to R$29.84 in the past week. It will be interesting to see if this downgrade motivates investors to start selling their holdings.

Following the downgrade, the most recent consensus for 3R Petroleum Óleo e Gás from its seven analysts is for revenues of R$5.6b in 2023 which, if met, would be a major 224% increase on its sales over the past 12 months. Per-share earnings are expected to shoot up 935% to R$7.62. Before this latest update, the analysts had been forecasting revenues of R$6.2b and earnings per share (EPS) of R$11.28 in 2023. Indeed, we can see that the analysts are a lot more bearish about 3R Petroleum Óleo e Gás' prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.

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

It'll come as no surprise then, to learn that the analysts have cut their price target 6.6% to R$77.76. 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. The most optimistic 3R Petroleum Óleo e Gás analyst has a price target of R$100.00 per share, while the most pessimistic values it at R$56.00. This shows there is still some 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 3R Petroleum Óleo e Gás' past performance and to peers in the same industry. The analysts are definitely expecting 3R Petroleum Óleo e Gás' growth to accelerate, with the forecast 224% annualised growth to the end of 2023 ranking favourably alongside historical growth of 65% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue shrink 3.6% per year. It seems obvious that as part of the brighter growth outlook, 3R Petroleum Óleo e Gás is expected to grow 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 data indicates sales are expected to outperform the wider market. Even so, earnings per share are more important to the intrinsic value of the business. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of 3R Petroleum Óleo e Gás.

There might be good reason for analyst bearishness towards 3R Petroleum Óleo e Gás, like concerns around earnings quality. For more information, you can click here to discover this and the 1 other concern we've identified.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

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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.