Odfjell Drilling Ltd. Just Beat EPS By 70%: Here's What Analysts Think Will Happen Next

Odfjell Drilling Ltd. (OB:ODL) just released its quarterly report and things are looking bullish. Odfjell Drilling delivered a significant beat to revenue and earnings per share (EPS) expectations, hitting US$219m-12% above indicated-andUS$0.17-70% above forecasts- respectively 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

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Taking into account the latest results, the consensus forecast from Odfjell Drilling's three analysts is for revenues of US$879.7m in 2025. This reflects a meaningful 8.2% improvement in revenue compared to the last 12 months. Per-share earnings are expected to bounce 64% to US$0.73. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$841.6m and earnings per share (EPS) of US$0.68 in 2025. It looks like there's been a modest increase in sentiment following the latest results, withthe analysts becoming a bit more optimistic in their predictions for both revenues and earnings.

View our latest analysis for Odfjell Drilling

With these upgrades, we're not surprised to see that the analysts have lifted their price target 14% to kr95.10per share. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Odfjell Drilling analyst has a price target of kr99.75 per share, while the most pessimistic values it at kr85.79. We would probably assign less value to the analyst forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. 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 17% growth to the end of 2025 on an annualised basis. That is well above its historical decline of 0.9% 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 6.8% 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 biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Odfjell Drilling's earnings potential next year. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

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. We have estimates - from multiple Odfjell Drilling analysts - going out to 2027, and you can see them free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 1 warning sign for Odfjell Drilling that you should be aware of.

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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.