Earnings Miss: Odfjell Drilling Ltd. Missed EPS By 11% And Analysts Are Revising Their Forecasts

Investors in Odfjell Drilling Ltd. (OB:ODL) had a good week, as its shares rose 2.8% to close at kr63.20 following the release of its full-year results. It was not a great result overall. While revenues of US$776m were in line with analyst predictions, earnings were less than expected, missing statutory estimates by 11% to hit US$0.27 per share. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

View our latest analysis for Odfjell Drilling

After the latest results, the four analysts covering Odfjell Drilling are now predicting revenues of US$847.2m in 2025. If met, this would reflect a decent 9.2% improvement in revenue compared to the last 12 months. Per-share earnings are expected to surge 136% to US$0.64. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$842.5m and earnings per share (EPS) of US$0.67 in 2025. The analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share numbers for next year.

It might be a surprise to learn that the consensus price target was broadly unchanged at kr85.68, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Odfjell Drilling, with the most bullish analyst valuing it at kr99.45 and the most bearish at kr70.25 per share. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how analysts think this business will perform. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. For example, we noticed that Odfjell Drilling's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 9.2% growth to the end of 2025 on an annualised basis. That is well above its historical decline of 3.0% a year over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 3.4% annually. Not only are Odfjell Drilling's revenues expected to improve, it seems that the analysts are also expecting it 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. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster 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.

With that in mind, we wouldn't be too quick to come to a conclusion on Odfjell Drilling. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Odfjell Drilling going out to 2027, and you can see them free on our platform here..

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 2 warning signs with Odfjell Drilling , and understanding them should be part of your investment process.

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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.