Ithaca Energy plc Just Missed EPS By 36%: Here's What Analysts Think Will Happen Next

It's been a good week for Ithaca Energy plc (LON:ITH) shareholders, because the company has just released its latest yearly results, and the shares gained 2.1% to UK£1.50. It looks like a pretty bad result, all things considered. Although revenues of US$2.6b were in line with analyst predictions, statutory earnings fell badly short, missing estimates by 36% to hit US$1.02 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

View our latest analysis for Ithaca Energy

Taking into account the latest results, the most recent consensus for Ithaca Energy from five analysts is for revenues of US$3.02b in 2023 which, if met, would be a meaningful 16% increase on its sales over the past 12 months. Statutory earnings per share are expected to plummet 35% to US$0.66 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$3.06b and earnings per share (EPS) of US$0.67 in 2023. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.

It will come as no surprise then, to learn that the consensus price target is largely unchanged at UK£2.28. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Ithaca Energy at UK£2.70 per share, while the most bearish prices it at UK£1.55. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's pretty clear that there is an expectation that Ithaca Energy's revenue growth will slow down substantially, with revenues to the end of 2023 expected to display 16% growth on an annualised basis. This is compared to a historical growth rate of 44% over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue shrink 3.1% per year. Factoring in the forecast slowdown in growth, it's pretty clear that Ithaca Energy is still expected to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. On the plus side, they made no changes to their revenue estimates - and they expect sales to perform better than the wider industry. The consensus price target held steady at UK£2.28, with the latest estimates not enough to have an impact on their price targets.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Ithaca Energy going out to 2025, and you can see them free on our platform here..

Even so, be aware that Ithaca Energy is showing 3 warning signs in our investment analysis , and 1 of those 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.