Energean plc Just Missed Earnings - But Analysts Have Updated Their Models

It's shaping up to be a tough period for Energean plc (LON:ENOG), which a week ago released some disappointing annual results that could have a notable impact on how the market views the stock. It wasn't a great result overall - while revenue fell marginally short of analyst estimates at US$1.4b, statutory earnings missed forecasts by an incredible 34%, coming in at just US$1.06 per share. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

Check out our latest analysis for Energean

Taking into account the latest results, the consensus forecast from Energean's eight analysts is for revenues of US$2.02b in 2024. This reflects a major 43% improvement in revenue compared to the last 12 months. Per-share earnings are expected to leap 153% to US$2.55. In the lead-up to this report, the analysts had been modelling revenues of US$2.29b and earnings per share (EPS) of US$3.35 in 2024. It looks like sentiment has declined substantially in the aftermath of these results, with a substantial drop in revenue estimates and a pretty serious reduction to earnings per share numbers as well.

It'll come as no surprise then, to learn that the analysts have cut their price target 5.4% to UK£14.51. 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 Energean, with the most bullish analyst valuing it at UK£17.00 and the most bearish at UK£12.50 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 Energean shareholders.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Energean's past performance and to peers in the same industry. It's pretty clear that there is an expectation that Energean's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 43% growth on an annualised basis. This is compared to a historical growth rate of 59% over the past five years. Compare this with other companies in the same industry, which are forecast to see a revenue decline of 1.6% annually. Factoring in the forecast slowdown in growth, it's pretty clear that Energean 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 Energean's future valuation.

With that in mind, we wouldn't be too quick to come to a conclusion on Energean. Long-term earnings power is much more important than next year's profits. We have forecasts for Energean going out to 2026, and you can see them free on our platform here.

It is also worth noting that we have found 3 warning signs for Energean (2 are significant!) that you need to take into consideration.

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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.