Earnings Miss: STEP Energy Services Ltd. Missed EPS By 14% And Analysts Are Revising Their Forecasts

Shareholders in STEP Energy Services Ltd. (TSE:STEP) had a terrible week, as shares crashed 23% to CA$3.48 in the week since its latest annual results. It was not a great result overall. While revenues of CA$946m were in line with analyst predictions, earnings were less than expected, missing statutory estimates by 14% to hit CA$0.67 per share. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on STEP Energy Services after the latest results.

See our latest analysis for STEP Energy Services

After the latest results, the eight analysts covering STEP Energy Services are now predicting revenues of CA$1.00b in 2024. If met, this would reflect a satisfactory 6.1% improvement in revenue compared to the last 12 months. Per-share earnings are expected to bounce 37% to CA$0.96. Before this earnings report, the analysts had been forecasting revenues of CA$1.07b and earnings per share (EPS) of CA$1.12 in 2024. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a real cut to earnings per share estimates.

It'll come as no surprise then, to learn that the analysts have cut their price target 16% to CA$5.72. 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 STEP Energy Services, with the most bullish analyst valuing it at CA$7.50 and the most bearish at CA$4.50 per share. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

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. It's pretty clear that there is an expectation that STEP Energy Services' revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 6.1% growth on an annualised basis. This is compared to a historical growth rate of 9.5% over the past five years. Compare this with other companies in the same industry, which are forecast to see a revenue decline of 10% annually. Factoring in the forecast slowdown in growth, it's pretty clear that STEP Energy Services is still expected to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Unfortunately, they also downgraded their revenue estimates, and our data indicates that is expected to perform better than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of STEP Energy Services' future valuation.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for STEP Energy Services going out to 2026, and you can see them free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 1 warning sign for STEP Energy Services that you should be aware of.

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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.