Earnings Update: Paramount Resources Ltd. (TSE:POU) Just Reported Its Second-Quarter Results And Analysts Are Updating Their Forecasts

Shareholders might have noticed that Paramount Resources Ltd. (TSE:POU) filed its quarterly result this time last week. The early response was not positive, with shares down 8.4% to CA$27.20 in the past week. Paramount Resources reported in line with analyst predictions, delivering revenues of CA$462m and statutory earnings per share of CA$3.17, suggesting the business is executing well and in line with its plan. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

View our latest analysis for Paramount Resources

Taking into account the latest results, the most recent consensus for Paramount Resources from three analysts is for revenues of CA$1.89b in 2024. If met, it would imply a satisfactory 5.4% increase on its revenue over the past 12 months. Per-share earnings are expected to bounce 37% to CA$3.27. Yet prior to the latest earnings, the analysts had been anticipated revenues of CA$2.03b and earnings per share (EPS) of CA$3.37 in 2024. The analysts are less bullish than they were before these results, given the reduced revenue forecasts and the minor downgrade to earnings per share expectations.

The analysts made no major changes to their price target of CA$38.72, suggesting the downgrades are not expected to have a long-term impact on Paramount Resources' valuation. 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 Paramount Resources, with the most bullish analyst valuing it at CA$43.00 and the most bearish at CA$36.00 per share. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that Paramount Resources' revenue growth is expected to slow, with the forecast 11% annualised growth rate until the end of 2024 being well below the historical 24% p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 4.5% per year. Even after the forecast slowdown in growth, it seems obvious that Paramount Resources is also 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 Paramount Resources. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. The consensus price target held steady at CA$38.72, with the latest estimates not enough to have an impact on their price targets.

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 Paramount Resources going out to 2026, and you can see them free on our platform here..

And what about risks? Every company has them, and we've spotted 4 warning signs for Paramount Resources you should know about.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com