The quarterly results for AKITA Drilling Ltd. (TSE:AKT.A) were released last week, making it a good time to revisit its performance. It was a pretty bad result overall; while revenues were in line with expectations at CA$19m, statutory losses exploded to CA$0.21 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Following last week's earnings report, AKITA Drilling's two analysts are forecasting 2021 revenues to be CA$139.5m, approximately in line with the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 67% to CA$0.59. Before this latest report, the consensus had been expecting revenues of CA$129.5m and CA$0.62 per share in losses. It looks like there's been a modest increase in sentiment in the recent updates, with the analysts becoming a bit more optimistic in their predictions for both revenues and losses per share.
There was no major change to the consensus price target of CA$0.45, perhaps suggesting that the analysts remain concerned about ongoing losses despite the improved earnings and revenue outlook.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the AKITA Drilling's past performance and to peers in the same industry. We would highlight that sales are expected to reverse, with the forecast 0.8% revenue decline a notable change from historical growth of 17% 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 4.0% annually for the foreseeable future. It's pretty clear that AKITA Drilling's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. Fortunately, they also upgraded their revenue estimates, although our data indicates sales are expected to perform worse than the wider industry. The consensus price target held steady at CA$0.45, 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 AKITA Drilling. Long-term earnings power is much more important than next year's profits. We have analyst estimates for AKITA Drilling going out as far as 2022, and you can see them free on our platform here.
Even so, be aware that AKITA Drilling is showing 3 warning signs in our investment analysis , and 2 of those are potentially serious...
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