Stock Analysis

Results: MEG Energy Corp. Beat Earnings Expectations And Analysts Now Have New Forecasts

Source: Shutterstock

MEG Energy Corp. (TSE:MEG) just released its annual report and things are looking bullish. The company beat both earnings and revenue forecasts, with revenue of CA$4.3b, some 3.3% above estimates, and statutory earnings per share (EPS) coming in at CA$0.91, 37% ahead of 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

Check out our latest analysis for MEG Energy

TSX:MEG Earnings and Revenue Growth March 7th 2022

Taking into account the latest results, the most recent consensus for MEG Energy from four analysts is for revenues of CA$4.77b in 2022 which, if met, would be a notable 10% increase on its sales over the past 12 months. Statutory earnings per share are predicted to leap 133% to CA$2.15. Yet prior to the latest earnings, the analysts had been anticipated revenues of CA$4.82b and earnings per share (EPS) of CA$2.21 in 2022. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.

Despite cutting their earnings forecasts,the analysts have lifted their price target 5.3% to CA$19.13, suggesting that these impacts are not expected to weigh on the stock's value in the long term. 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 MEG Energy, with the most bullish analyst valuing it at CA$26.00 and the most bearish at CA$13.00 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

Of course, another way to look at these forecasts is to place them into context against the industry itself. The period to the end of 2022 brings more of the same, according to the analysts, with revenue forecast to display 10% growth on an annualised basis. That is in line with its 9.6% annual growth over the past five years. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 6.5% annually. So although MEG Energy is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for MEG Energy. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for MEG Energy going out to 2023, and you can see them free on our platform here..

And what about risks? Every company has them, and we've spotted 3 warning signs for MEG Energy (of which 1 is significant!) you should know about.

Valuation is complex, but we're helping make it simple.

Find out whether MEG Energy is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

View the Free Analysis