Earnings Miss: TGS ASA Missed EPS By 32% And Analysts Are Revising Their Forecasts

It's been a pretty great week for TGS ASA (OB:TGS) shareholders, with its shares surging 11% to kr106 in the week since its latest quarterly results. Revenue of US$451m surpassed estimates by 3.0%, although statutory earnings per share missed badly, coming in 32% below expectations at US$0.19 per share. 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 TGS after the latest results.

View our latest analysis for TGS

Following the latest results, TGS' five analysts are now forecasting revenues of US$1.80b in 2025. This would be a sizeable 77% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to shoot up 400% to US$1.20. Before this earnings report, the analysts had been forecasting revenues of US$1.77b and earnings per share (EPS) of US$1.33 in 2025. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a small dip in their earnings per share forecasts.

It might be a surprise to learn that the consensus price target was broadly unchanged at kr146, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on TGS, with the most bullish analyst valuing it at kr251 and the most bearish at kr70.09 per share. With such a wide range in price targets, analysts are almost certainly betting on widely divergent outcomes in the underlying business. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the TGS' past performance and to peers in the same industry. It's clear from the latest estimates that TGS' rate of growth is expected to accelerate meaningfully, with the forecast 58% annualised revenue growth to the end of 2025 noticeably faster than its historical growth of 13% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 5.2% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that TGS is expected to grow much faster than its industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for TGS. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target held steady at kr146, with the latest estimates not enough to have an impact on their price targets.

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 TGS analysts - going out to 2026, and you can see them free on our platform here.

And what about risks? Every company has them, and we've spotted 4 warning signs for TGS you should know about.

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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.