Shelf Drilling, Ltd. Just Recorded A 8.9% Revenue Beat: Here's What Analysts Think

It's been a good week for Shelf Drilling, Ltd. (OB:SHLF) shareholders, because the company has just released its latest quarterly results, and the shares gained 9.0% to kr28.45. Results overall were respectable, with statutory earnings of US$0.01 per share roughly in line with what the analysts had forecast. Revenues of US$214m came in 8.9% ahead of analyst predictions. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Shelf Drilling after the latest results.

View our latest analysis for Shelf Drilling

After the latest results, the dual analysts covering Shelf Drilling are now predicting revenues of US$878.0m in 2023. If met, this would reflect a solid 12% improvement in revenue compared to the last 12 months. Earnings are expected to improve, with Shelf Drilling forecast to report a statutory profit of US$0.11 per share. In the lead-up to this report, the analysts had been modelling revenues of US$798.6m and earnings per share (EPS) of US$0.15 in 2023. So it's pretty clear the analysts have mixed opinions on Shelf Drilling after the latest results; even though they upped their revenue numbers, it came at the cost of a pretty serious reduction to per-share earnings expectations.

The analysts also upgraded Shelf Drilling's price target 8.1% to kr45.12, implying that the higher revenue expected to generate enough value to offset the forecast decline in earnings.

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 clear from the latest estimates that Shelf Drilling's rate of growth is expected to accelerate meaningfully, with the forecast 25% annualised revenue growth to the end of 2023 noticeably faster than its historical growth of 2.3% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 11% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Shelf Drilling to grow faster than the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Shelf Drilling. Happily, they also upgraded their revenue estimates, and are forecasting them to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

With that in mind, we wouldn't be too quick to come to a conclusion on Shelf Drilling. Long-term earnings power is much more important than next year's profits. We have analyst estimates for Shelf Drilling going out as far as 2025, and you can see them free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 2 warning signs for Shelf 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.