News Flash: 6 Analysts Think Tidewater Renewables Ltd. (TSE:LCFS) Earnings Are Under Threat

The analysts covering Tidewater Renewables Ltd. (TSE:LCFS) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Both revenue and earnings per share (EPS) estimates were cut sharply as analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

Following the downgrade, the current consensus from Tidewater Renewables' six analysts is for revenues of CA$238m in 2023 which - if met - would reflect a huge 213% increase on its sales over the past 12 months. Per-share earnings are expected to soar 54% to CA$1.15. Prior to this update, the analysts had been forecasting revenues of CA$299m and earnings per share (EPS) of CA$1.55 in 2023. Indeed, we can see that the analysts are a lot more bearish about Tidewater Renewables' prospects, administering a pretty serious reduction to revenue estimates and slashing their EPS estimates to boot.

Check out our latest analysis for Tidewater Renewables

It'll come as no surprise then, to learn that the analysts have cut their price target 6.8% to CA$17.35. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Tidewater Renewables, with the most bullish analyst valuing it at CA$20.00 and the most bearish at CA$15.00 per share. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that the analysts have a clear view on its prospects.

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. It's clear from the latest estimates that Tidewater Renewables' rate of growth is expected to accelerate meaningfully, with the forecast 213% annualised revenue growth to the end of 2023 noticeably faster than its historical growth of 120% over the past year. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue shrink 1.4% per year. So it's clear with the acceleration in growth, Tidewater Renewables is expected to grow meaningfully 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 Tidewater Renewables.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Tidewater Renewables going out to 2024, and you can see them free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks 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.