Broker Revenue Forecasts For Source Energy Services Ltd. (TSE:SHLE) Are Surging Higher

Shareholders in Source Energy Services Ltd. (TSE:SHLE) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. The consensus estimated revenue numbers rose, with their view now clearly much more bullish on the company's business prospects.

Following the upgrade, the current consensus from Source Energy Services' twin analysts is for revenues of CA$595m in 2023 which - if met - would reflect a major 23% increase on its sales over the past 12 months. Per-share earnings are expected to jump 392% to CA$2.09. Before this latest update, the analysts had been forecasting revenues of CA$531m and earnings per share (EPS) of CA$2.09 in 2023. It seems analyst sentiment has certainly become more bullish on revenues, even though they haven't changed their view on earnings per share.

View our latest analysis for Source Energy Services

Analysts increased their price target 18% to CA$8.25, perhaps signalling that higher revenues are a strong leading indicator for Source Energy Services's valuation. 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 Source Energy Services, with the most bullish analyst valuing it at CA$10.00 and the most bearish at CA$6.50 per share. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Source Energy Services shareholders.

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. The analysts are definitely expecting Source Energy Services' growth to accelerate, with the forecast 32% annualised growth to the end of 2023 ranking favourably alongside historical growth of 0.1% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to see a revenue decline of 3.6% annually. So it's clear with the acceleration in growth, Source Energy Services is expected to grow meaningfully faster than the wider industry.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. On the plus side, they also lifted their revenue estimates, and the company is expected to perform better than the wider market. There was also a nice increase in the price target, with analysts apparently feeling that the intrinsic value of the business is improving. Seeing the dramatic upgrade to this year's forecasts, it might be time to take another look at Source Energy Services.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have analyst estimates for Source Energy Services going out as far as 2024, and you can see them free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies 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.