GURU Organic Energy Corp. (TSE:GURU) Just Reported And Analysts Have Been Cutting Their Estimates

GURU Organic Energy Corp. (TSE:GURU) shareholders are probably feeling a little disappointed, since its shares fell 6.1% to CA$2.75 in the week after its latest yearly results. It was a respectable set of results; while revenues of CA$29m were in line with analyst predictions, statutory losses were 18% smaller than expected, with GURU Organic Energy losing CA$0.54 per share. 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. 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 GURU Organic Energy

Taking into account the latest results, the current consensus from GURU Organic Energy's four analysts is for revenues of CA$31.8m in 2023, which would reflect a decent 9.3% increase on its sales over the past 12 months. Losses are expected to be contained, narrowing 12% from last year to CA$0.48. Before this latest report, the consensus had been expecting revenues of CA$34.3m and CA$0.47 per share in losses. So it's pretty clear consensus is more negative on GURU Organic Energy after the new consensus numbers; while the analysts trimmed their revenue estimates, they also administered a pronounced increase to per-share loss expectations.

The average price target fell 18% to CA$4.28, implicitly signalling that lower earnings per share are a leading indicator for GURU Organic Energy's 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. The most optimistic GURU Organic Energy analyst has a price target of CA$6.00 per share, while the most pessimistic values it at CA$2.85. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's pretty clear that there is an expectation that GURU Organic Energy's revenue growth will slow down substantially, with revenues to the end of 2023 expected to display 9.3% growth on an annualised basis. This is compared to a historical growth rate of 20% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 5.7% annually. So it's pretty clear that, while GURU Organic Energy's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The most important thing to take away is that the analysts increased their loss per share estimates for next year. They also downgraded their revenue estimates, although industry data suggests that GURU Organic Energy's revenues are expected to grow faster than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for GURU Organic Energy going out to 2025, and you can see them free on our platform here.

You still need to take note of risks, for example - GURU Organic Energy has 2 warning signs we think 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.