Canacol Energy Ltd Just Missed EPS By 48%: Here's What Analysts Think Will Happen Next

Canacol Energy Ltd (TSE:CNE) shareholders are probably feeling a little disappointed, since its shares fell 3.3% to CA$3.18 in the week after its latest yearly results. Results were mixed, with revenues of US$311m exceeding expectations, even as statutory earnings per share (EPS) fell badly short. Earnings were US$0.09 per share, -48% short of analyst expectations. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

View our latest analysis for Canacol Energy

After the latest results, the consensus from Canacol Energy's three analysts is for revenues of US$301.2m in 2022, which would reflect a perceptible 3.0% decline in sales compared to the last year of performance. Statutory earnings per share are predicted to jump 373% to US$0.42. Before this earnings report, the analysts had been forecasting revenues of US$296.9m and earnings per share (EPS) of US$0.41 in 2022. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.

With no major changes to earnings forecasts, the consensus price target fell 7.1% to CA$5.62, suggesting that the analysts might have previously been hoping for an earnings upgrade. 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. Currently, the most bullish analyst values Canacol Energy at CA$6.50 per share, while the most bearish prices it at CA$4.00. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

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. We would highlight that sales are expected to reverse, with a forecast 3.0% annualised revenue decline to the end of 2022. That is a notable change from historical growth of 15% 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 6.5% annually for the foreseeable future. It's pretty clear that Canacol Energy's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Canacol Energy's future valuation.

With that in mind, we wouldn't be too quick to come to a conclusion on Canacol Energy. 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 Canacol Energy going out to 2023, and you can see them free on our platform here..

You still need to take note of risks, for example - Canacol Energy has 2 warning signs we think 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.