Analysts' Revenue Estimates For Gibson Energy Inc. (TSE:GEI) Are Surging Higher

Gibson Energy Inc. (TSE:GEI) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. The revenue forecast for this year has experienced a facelift, with the analysts now much more optimistic on its sales pipeline. Investor sentiment seems to be improving too, with the share price up 9.3% to CA$23.41 over the past 7 days. It will be interesting to see if this latest upgrade is enough to kickstart further buying interest in the stock.

After this upgrade, Gibson Energy's eight analysts are now forecasting revenues of CA$6.9b in 2021. This would be a major 35% improvement in sales compared to the last 12 months. Per-share earnings are expected to bounce 47% to CA$1.04. Previously, the analysts had been modelling revenues of CA$5.8b and earnings per share (EPS) of CA$1.01 in 2021. The most recent forecasts are noticeably more optimistic, with a nice increase in revenue estimates and a lift to earnings per share as well.

See our latest analysis for Gibson Energy

Despite these upgrades, the analysts have not made any major changes to their price target of CA$24.24, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Gibson Energy, with the most bullish analyst valuing it at CA$28.00 and the most bearish at CA$22.00 per share. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Gibson Energy is an easy business to forecast or the underlying assumptions are obvious.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. The analysts are definitely expecting Gibson Energy's growth to accelerate, with the forecast 49% annualised growth to the end of 2021 ranking favourably alongside historical growth of 5.2% per annum 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 11% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Gibson Energy to grow faster than the wider industry.

The Bottom Line

The most important thing to take away from this upgrade is that analysts upgraded their earnings per share estimates for this year, expecting improving business conditions. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at Gibson Energy.

These earnings upgrades look like a sterling endorsement, but before diving in - you should know that we've spotted 3 potential concerns with Gibson Energy, including the risk of cutting its dividend. You can learn more, and discover the 2 other concerns we've identified, for free on our platform here.

We also provide an overview of the Gibson Energy Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.

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This article by Simply Wall St is general in nature. 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.
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