Rainbows and Unicorns: COSCO SHIPPING Energy Transportation Co., Ltd. (HKG:1138) Analysts Just Became A Lot More Optimistic

COSCO SHIPPING Energy Transportation Co., Ltd. (HKG:1138) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. The analysts greatly increased their revenue estimates, suggesting a stark improvement in business fundamentals.

After the upgrade, the four analysts covering COSCO SHIPPING Energy Transportation are now predicting revenues of CN¥17b in 2022. If met, this would reflect a solid 10% improvement in sales compared to the last 12 months. The losses are expected to disappear over the next year or so, with forecasts for a profit of CN¥0.32 per share this year. Previously, the analysts had been modelling revenues of CN¥16b and earnings per share (EPS) of CN¥0.28 in 2022. So we can see there's been a pretty clear increase in analyst sentiment in recent times, with both revenues and earnings per share receiving a decent lift in the latest estimates.

Our analysis indicates that 1138 is potentially undervalued!

It will come as no surprise to learn that the analysts have increased their price target for COSCO SHIPPING Energy Transportation 11% to CN¥7.27 on the back of these upgrades. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic COSCO SHIPPING Energy Transportation analyst has a price target of CN¥9.00 per share, while the most pessimistic values it at CN¥4.59. 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.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the COSCO SHIPPING Energy Transportation's past performance and to peers in the same industry. The analysts are definitely expecting COSCO SHIPPING Energy Transportation's growth to accelerate, with the forecast 10% annualised growth to the end of 2022 ranking favourably alongside historical growth of 7.1% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to see a revenue decline of 4.1% annually. So it's clear with the acceleration in growth, COSCO SHIPPING Energy Transportation is expected to grow meaningfully faster than the wider industry.

The Bottom Line

The most important thing to take away from this upgrade is that analysts upgraded their earnings per share estimates for this year, expecting improving business conditions. On the plus side, they also lifted their revenue estimates, and the company is expected to perform better than the wider market. With a serious upgrade to expectations and a rising price target, it might be time to take another look at COSCO SHIPPING Energy Transportation.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple COSCO SHIPPING Energy Transportation analysts - going out to 2024, and you can see them free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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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.