Stock Analysis

Results: Motor Oil (Hellas) Corinth Refineries S.A. Exceeded Expectations And The Consensus Has Updated Its Estimates

ATSE:MOH
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It's been a good week for Motor Oil (Hellas) Corinth Refineries S.A. (ATH:MOH) shareholders, because the company has just released its latest third-quarter results, and the shares gained 9.5% to €11.25. It looks to have been a decent result overall - while revenue fell marginally short of analyst estimates at €1.6b, statutory earnings beat expectations by a notable 269%, coming in at €0.39 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 gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

View our latest analysis for Motor Oil (Hellas) Corinth Refineries

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ATSE:MOH Earnings and Revenue Growth November 27th 2020

Taking into account the latest results, the consensus forecast from Motor Oil (Hellas) Corinth Refineries' eight analysts is for revenues of €7.07b in 2021, which would reflect a credible 4.1% improvement in sales compared to the last 12 months. Motor Oil (Hellas) Corinth Refineries is also expected to turn profitable, with statutory earnings of €1.36 per share. In the lead-up to this report, the analysts had been modelling revenues of €7.16b and earnings per share (EPS) of €1.52 in 2021. So there's definitely been a decline in sentiment after the latest results, noting the real cut to new EPS forecasts.

It might be a surprise to learn that the consensus price target was broadly unchanged at €15.28, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Motor Oil (Hellas) Corinth Refineries at €19.00 per share, while the most bearish prices it at €9.00. 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. We would highlight that Motor Oil (Hellas) Corinth Refineries' revenue growth is expected to slow, with forecast 4.1% increase next year well below the historical 6.3%p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 11% next year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Motor Oil (Hellas) Corinth Refineries.

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. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Motor Oil (Hellas) Corinth Refineries' revenues are expected to perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Motor Oil (Hellas) Corinth Refineries going out to 2022, and you can see them free on our platform here..

We don't want to rain on the parade too much, but we did also find 3 warning signs for Motor Oil (Hellas) Corinth Refineries (1 makes us a bit uncomfortable!) that you need to be mindful of.

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