Revenue Beat: 2020 Bulkers Ltd. Exceeded Revenue Forecasts By 111% And Analysts Are Updating Their Estimates

2020 Bulkers Ltd. (OB:2020) just released its latest quarterly results and things are looking bullish. Statutory earnings performance was extremely strong, with revenue of US$40m beating expectations by 111% and earnings per share (EPS) of US$1.25, an impressive 22%ahead of expectations. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on 2020 Bulkers after the latest results.

Check out our latest analysis for 2020 Bulkers

Following the recent earnings report, the consensus from five analysts covering 2020 Bulkers is for revenues of US$76.8m in 2024. This implies a disturbing 22% decline in revenue compared to the last 12 months. Statutory earnings per share are predicted to surge 34% to US$3.13. Before this earnings report, the analysts had been forecasting revenues of US$85.0m and earnings per share (EPS) of US$1.82 in 2024. Although the analysts have lowered their revenue forecasts, they've also made a great increase in their earnings per share estimates, which implies there's been something of an uptick in sentiment following the latest results.

The consensus has made no major changes to the price target of kr169, suggesting the forecast improvement in earnings is expected to offset the decline in revenues next year. 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. Currently, the most bullish analyst values 2020 Bulkers at kr184 per share, while the most bearish prices it at kr153. 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.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 28% by the end of 2024. This indicates a significant reduction from annual growth of 32% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 0.7% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - 2020 Bulkers is expected to lag the wider industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards 2020 Bulkers following these results. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. Still, earnings per share are more important to value creation for shareholders. 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 said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple 2020 Bulkers analysts - going out to 2026, and you can see them free on our platform here.

Even so, be aware that 2020 Bulkers is showing 3 warning signs in our investment analysis , and 1 of those is a bit unpleasant...

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.