Today is shaping up negative for Touchstone Exploration Inc. (TSE:TXP) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon.
Following the downgrade, the current consensus from Touchstone Exploration's four analysts is for revenues of US$51m in 2022 which - if met - would reflect a sizeable 149% increase on its sales over the past 12 months. Per-share earnings are expected to increase 4.3% to US$0.028. Before this latest update, the analysts had been forecasting revenues of US$63m and earnings per share (EPS) of US$0.049 in 2022. Indeed, we can see that the analysts are a lot more bearish about Touchstone Exploration's prospects, administering a substantial drop in revenue estimates and slashing their EPS estimates to boot.
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 Touchstone Exploration's growth to accelerate, with the forecast 149% annualised growth to the end of 2022 ranking favourably alongside historical growth of 0.5% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 7.6% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Touchstone Exploration to grow faster than the wider industry.
The Bottom Line
The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for Touchstone Exploration. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. Given the serious cut to this year's outlook, it's clear that analysts have turned more bearish on Touchstone Exploration, and we wouldn't blame shareholders for feeling a little more cautious themselves.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple Touchstone Exploration analysts - going out to 2024, and you can see them free on our platform here.
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