Source Energy Services Ltd. Just Missed Earnings - But Analysts Have Updated Their Models

It's been a mediocre week for Source Energy Services Ltd. (TSE:SHLE) shareholders, with the stock dropping 10% to CA$11.71 in the week since its latest full-year results. Results overall were not great, with earnings of CA$0.70 per share falling drastically short of analyst expectations. Meanwhile revenues hit CA$674m and were slightly better than forecasts. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

View our latest analysis for Source Energy Services

Taking into account the latest results, the most recent consensus for Source Energy Services from two analysts is for revenues of CA$702.8m in 2025. If met, it would imply a modest 4.3% increase on its revenue over the past 12 months. Per-share earnings are expected to surge 376% to CA$3.35. Before this earnings report, the analysts had been forecasting revenues of CA$712.5m and earnings per share (EPS) of CA$4.19 in 2025. The analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a large cut to EPS estimates.

Despite cutting their earnings forecasts,the analysts have lifted their price target 16% to CA$18.00, suggesting that these impacts are not expected to weigh on the stock's value in the long term.

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 Source Energy Services' revenue growth is expected to slow, with the forecast 4.3% annualised growth rate until the end of 2025 being well below the historical 21% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 5.2% per year. Factoring in the forecast slowdown in growth, it seems obvious that Source Energy Services is also expected to grow slower than other industry participants.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Source Energy Services. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Source Energy Services' revenue is expected to perform worse than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At least one analyst has provided forecasts out to 2026, which can be seen for free on our platform here.

You should always think about risks though. Case in point, we've spotted 2 warning signs for Source Energy Services you should be aware of, and 1 of them can't be ignored.

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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.